Farmers and Habits: The Challenge of Identifying the Sources of Persistence in Tillage Decisions

A number of government programs, including USDA conservation programs, provide financial incentives to entice changes in behavior. An important question for these programs is whether temporary payments can lead to persistent behavioral changes. Over the past 20 years, the USDA Environmental Quality Incentives Program (EQIP) has provided more than $250 million to farmers adopting no-till crop production. In contrast to conventional tillage, which turns over the soil prior to planting, no-till can produce a number of environmental goods such as soil carbon sequestration, especially if farmers adopt no-till continuously for a long time period. This study examines whether temporary no-till payments result in persistent adoption of no-till beyond the term of conservation contracts. In the first part of our analysis, we examine field-level survey data, model no-till adoption as a second-order Markov process, and establish that in general there is considerable persistence in farmers’ tillage decisions. In the second part of our analysis, we examine a unique dataset of satellite-based estimates of field-level residue estimates in the Northern High Plains and examine changes in residue before, during, and after enrollment in EQIP. We conclude by discussing the potential implications of persistence for program outcomes as well as the challenges in identifying the mechanisms driving persistence. Can temporary incentives induce persistent behavioral changes? Government programs often use temporary subsidies to incentivize behavioral changes, and the persistence of those changes 1USDA Economic Research Service, 355 E Street SW, Washington, DC, 20025; [email protected], 202-6945546. 3 can have large implications for policy outcomes. Persistent effects of temporary incentives also have implications for private sector decisions and are receiving increasing attention within behavioral economics. For example, research on the dynamics of brand loyalty finds evidence of such effects but also finds that much of the observed persistence in consumer choice is explained by factors other than “structural” persistence (Keane, 2013). In this study, we examine the evidence for persistence in the context of U.S. Department of Agriculture (USDA) payments for the adoption of no-till. The USDA working lands conservation programs – the Environmental Quality Incentives Program (EQIP), the Conservation Stewardship Program (CSP), and several other smaller programs – provide over $2 billion per year in payments to farms who agree to adopt conservation practices on eligible land. A large share of these programs involves financial assistance to farmers who adopt specific management practices each year during a defined contract period. Many EQIP no-till contracts span three-years. Program participants are typically not under any obligation to continue using those practices after their contracts are closed out. No-till has been one of the most prevalent practices over EQIP’s 20 year history, and over the life of the program USDA has obligated over $250 million toward no-till.i Conventional tillage involves plowing (i.e.: “tilling”) fields prior to planting a crop in order to mechanically control weeds, incorporate nutrients, or otherwise prepare the seed bed for planting. Farmers engaged in no-till will plant through the residue left from the prior crop. USDA conservation programs have supported no-till (as well as reduced tillage) due to the many environmental benefits that are associated with the practice, including reduced soil erosion, reduced fertilizer usage, and increased soil carbon. While EQIP and other programs have heavily encouraged no-till adoption, many farmers have adopted no-till without receiving