Economic analysis of Conservation Reserve Program (CRP) and post-CRP land use decisions in South Dakota

The Conservation Reserve Program (CRP) was created in 1985 as a federal program to retire highly erodible and environmentally sensitive cropland in a CRP land for 10-15 years. South Dakota currently has about 1.3 million acres of cropland enrolled in CRP. The greatest number of CRP acres is located in the northeast and north central regions of South Dakota. From 2008 to 2010, CRP contracts totaling nearly 508,000 acres in South Dakota are set to expire. From 2011 to 2013 another 420,700 acres are in expiring CRP contracts and the remaining 364,600 CRP acres are in contracts expiring from 2014 -- 2023.;The major objective of this research is to provide policy makers with information about South Dakota CRP and the decisions of contract holders as their contracts expire. The data for this study was derived from a survey which was sent out to 2,524 South Dakota CRP contract holders in September/October 2007. A total of 753 respondents provided useable data for the survey, for a response rate of 30 percent. A majority of respondents indicate the "opportunity to re-enroll" and "market prices of crops/livestock" were the most important factors that will influence their decisions.;Cumulative logistic regression is used in predicting the respondents CRP re-enrollment and post-CRP land use decisions as a results of the huge expiring contracts in South Dakota. Key explanatory variables include demographic factors, economic & management factors, CRP land factors, and land location factors.;The respondent's opportunity to re-enroll in a new CRP contract, market prices for crops or livestock, acres enrolled in the CRP as well as the importance of wildlife and wildlife habitat were the only significant explanatory variables determining the respondent's decision to re-enroll in a new CRP contract.;Regional location is a strong factor associated with post-CRP decision of grass and crop. The land located in West River would likely be used for livestock grazing whereas that of East River will be used for crop production. Market prices for crops or livestock are the only significant economic variable in the post-CRP land use decision of crops or grass decisions.;Based on the respondent land use decisions, re-enrollment preference and the amount of CRP acres held by each group, a projection of 34.2 percent of respondent CRP acres are considered "very likely" to be enrolled, 28.8 percent of their CRP acres are "somewhat likely" to be re-enrolled, and 37.0 percent of their CRP acres are "not likely" to be enrolled in a new CRP contract.