In this paper, we examine command-and-control (CAC) policies and market-based instruments (MBI) in the context of the Conservation Reserve Program (CRP). The CRP, an MBI in the form of subsidies, is by far the largest agro-environmental policy implemented to date. We compare the environmental performance of the CRP as implemented to a few counterfactual CAC polices using EPIC (Environmental Policy Integrated Climate), a bio-physical simulation model. In the context of multiple environmental indicators, no policy alternative emerges as a clear winner. The importance of the choice and design of CAC policies is emphasized.
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.
Feng, Hongli; Kling, Catherine L.; Kurkalova, Lyubov A.; and Secchi, Silvia, "Subsidies! The Other Incentive-Based Instrument: The Case of the Conservation Reserve Program" (2003). CARD Working Papers. 366.