Estimating the Effects of Relaxing Agricultural Land Use Restrictions: Wetland Delineation in the Swampbuster Program

Abstract

Abstract Wetland protection is an issue of ongoing debate. Although it is widely agreed that wetland loss to agriculture has been declining in recent decades, the role of policy remains contentious. We analyze the effect of changes in wetland delineation rules that were proposed but rejected by Congress during the 1996 farm bill debate. Our research combines detailed, site‐specific information on wetlands with a broader model of the agricultural economy. Using site‐specific data, we analyze the potential agricultural profitability of a representative sample of actual wetlands. We estimate wetland acreage that would have been exempted from swampbuster and Section 404 of the Clean Water Act under the proposed delineation changes, the acreage of exempted wetland that could be profitably converted to crop production, and the associated commodity price, crop acreage, and farm income effects. We find that up to 82.7 million wetland acres would be exempted under the proposed delineation changes, of which as many as 12 million acres could be profitably converted to crop production. This conversion would have a dampening effect on commodity price and farm income. We conclude that ( a accurately estimating the effect of resource policy depends critically on detailed information on resource quality and ( b ) commodity price and farm income effects imply that all agriculture producers—not only those who could expand cropland acreage through wetland drainage—have a stake in wetland policy.