NRCS Economic Tools, Resources and Concepts

Economic Principles

March 2004

Maine

NRCS Economic Guidelines and References

• eFOTG • NRCS Economics Handbooks • NRCS Economists • National Planning Procedures

Handbook• NEDC Economics of

Conservation Planning Course• Web sites

eFOTG Economic Resources

• Section I – Economics References and Practice Cost Data

• Section I Cost List - estimate what a practice may actually cost to install, irregardless of program or cost-share

Statewide Practice Cost Listhttp://efotg.nrcs.usda.gov/references/public/ME/StatewidePracticeCostList.xls

eFOTG Statewide Practice Cost List

• Provides estimates of what conservation practices may cost the client to install

• Not for programmatic cost-share purposes

• Planning and informational tool

• Installation costs vary considerablyInstallation costs vary considerably – therefore ranges given for each practice

Program Cost Lists

Program Cost Lists

• Administrative documents that display maximum payments, cost share rates and incentive payments for programs such as EQIP, WHIP, WRP, etc.

• Based on actual costs, program rules and state or local priorities

• NOT IN THE eFOTG – not technical documents

Program Cost List Update Process

Assess changes needed

Collect actual cost data

Analyze data

Make proposed changes – set AM, FR, AC

Field Office reviewRegional Office

approval (for EQIP)

Upload into CST

FY 2004 Update

• Collected actual cost data from CCC-1245s to develop descriptive statisticsdescriptive statistics about statewide costs

• Mean, median, standard deviation

• Indexed to 2003 dollars

512 - Pasture and Hayland Planting Costs per Acre

Dollars per Acre

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Cost-sharing Methods

• http://policy.nrcs.usda.gov/scripts/lpsiis.dll/GM/GM_120_404_d.htm

Cost-Sharing Methods• Average Cost (AC)The client receives a percentage of the average cost,

regardless of what it actually costs them. The average cost is calculated locally beforehand.

• Actual Not To Exceed a Specified Maximum (AM)

The client receives a percentage of the actual cost, as long it does not exceed a maximum rate determined before hand. Usually bills for work are collected.

• Flat Rate (FR)The client receives a predetermined amount, regardless of what it cost

them to perform the practice. The amount may be based on several factors besides the actual cost of the practice.

FOTG Economics References

eFOTG Section I Economics Referenceshttp://efotg.nrcs.usda.gov/treemenuFS.aspx?Fips=23029&MenuName=menuME.zip

• Agricultural statistics

• Economic, demographic, and census data

• Machinery costs and custom rates

• Livestock economics

• NRCS economics handbooks

• Crop budgets

• Irrigation investment costs

Machinery Costs & Custom Rates

• Provides estimates of how much farm operations cost

• Used as a reference in setting incentive payments

• Help estimate how much certain practices might cost to perform (or how much they will save!)

• Estimates in Northeast available from PA and MD NASS

Case Studies – Section V

• Provide a means to share conservation planning results

• Quick and practical means to share information to producers with similar resource conditions

• PARTIAL BUDGETS PROVIDE AN EXCELLENT FORMAT

• Opportunity to show off good projects

NRCS Economics Resources on the web

• NRCS Economics and Analysis Site

http://waterhome.brc.tamus.edu/NRCSdata/• Social Sciences Institute

http://www.ssi.nrcs.usda.gov/• Alternative Enterprises Publication

http://www.nrcs.usda.gov/technical/RESS/altenterprise/toolkit.html

• Natural Resource Economics

http://www.ecosystemvaluation.org/dollar_based.htm

Economic Principles Summary

• Economics is a tool for decision making which can be used at several levels (from Congress to the farm field)

• Get the most for what we have

• Dollar figures aren’t always necessary

• Many tools - pick the one to fit the question you’re asking

Economic Principles Summary (cont.)

• You have help

• Broad generalizations difficult to make (problems are site-specific)

• There are other decision-making other decision-making processesprocesses (political, bureaucratic, etc.) – economics is just one of many