Subsidies! The Other Incentive‐Based Instrument: The Case of the Conservation Reserve Program

Campus Units

Economics, Center for Agricultural and Rural Development

Document Type

Book Chapter

Publication Version

Submitted Manuscript

Publication Date


Journal or Book Title

Moving to Markets in Environmental Regulation








This essay studies a very large and important example of an environmental subsidy program — the Conservation Reserve Program (CRP). The CRP was introduced in 1985. It investigates how much less efficient, if any, a command-and-control (CAC) form of regulation would have been. That is, it seeks to assess the policy as implemented relative to a fundamentally different form of regulation — CAC. It then studies the ex post performance of this incentive-based instrument. In so doing, it provides information on the degree to which market-based incentive programs, as they have actually been implemented, have or have not lived up to the original optimism with which economists viewed such instruments.


This working paper was published as Feng, Hongli, Catherine Kling, Lyubov Kurkalova and Silvia Secchi, "Subsidies! The Other Incentive-Based Instrument: The Case of the Conservation Reserve Program," in Moving to Markets in Environmental Regulation: Lessons from Twenty Years of Experience, edited by Jody Freeman and Charles D. Kolstad (Oxford, England: Oxford University Press, 2006), doi:10.1093/acprof:oso/9780195189650.003.0009.