The Conservation Reserve Program as a Least‐Cost Land Retirement Mechanism

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Abstract
Mechanism design theory is used to characterize the properties of a least‐cost CRP. If marginal land rents decrease with acres farmed then a least‐cost CRP is a set of nonlinear price schedules. If marginal land rents are independent of acres farmed then an offer system constitutes a least‐cost CRP. The least‐cost offer system gives a useful estimate of the upper bound of a least‐cost CRP. Empirical results suggest that a 34‐million‐acre CRP should have cost no more than $@@‐@@1 billion per year.

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