The effect of rental rates on the extension of Conservation Reserve Program contracts

This paper presents a model for estimating the change in conservation reserve program (CRP) contract extensions as a function of the change in rental rates. The majority of the CRP contracts on approximately 36 million acres of enrolled land are expiring within the next two years, with the result that re-enrollment decisions by farmers and the federal government will have high budgetary implications. In a modification of the traditional dichotomous choice method for estimating random utility models in consumer surveys, we develop an ordered response referendum model that allows us to explicitly model the range in rental rates over which the representative farmer may be ambivalent to renewing the CRP contract. We use the empirical results from the ordered response model to estimate acreage re-enrollment as a function of the rental rate.