States that embrace innovative new ways to finance on-farm conservation can deliver multiple benefits to farmers, state residents, taxpayers and the environment, according to a new report released at the National Association of State Departments of Agriculture (NASDA) annual meeting by NASDA and the Environmental Defense Fund (EDF).

The report, "Innovative State-Led Efforts to Finance Agricultural Conservation" (pdf), highlights state-level programs that use non-traditional financing mechanisms, including crop insurance discounts and transferable tax credits, to incentivize conservation adoption.

A growing number of farmers are discovering that conservation practices can reduce costs, improve resilience to variable weather and generate additional benefits to the water, air and wildlife. However, any farm management transition involves a certain amount of cost and risk, and some conservation practices offer purely public benefits. For these reasons, public programs that support farmers in adopting agricultural conservation practices are a critical element in advancing conservation broadly.

“The solutions in this report help state and private dollars go further toward increasing the number of acres of farmland under conservation management across the country,” NASDA chief executive officer Dr. Barb Glenn said. “These efforts ensure that valuable resources remain productive well into the future. We hope that states will exchange ideas with each other about best practices and effective program design for scaling conservation efforts.”

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The efforts highlighted in the report offer multiple demonstrated benefits. Farmers benefit from support in adopting conservation practices, which is particularly important in a depressed farm economy. State residents benefit from improved water quality, reduced agricultural water consumption, increased wildlife habitat and a more resilient food system. Taxpayers benefit from programs that are tailored to states’ specific needs to make more cost-effective use of public dollars. The entire country benefits from the incubation of ideas that can be implemented in other states or at the federal level.

“Existing federal and state conservation programs are essential but provide insufficient funding to meet today’s environmental challenges. In response, states are finding creative ways to incentivize practices that protect drinking water and soil health and improve the resilience of the agricultural economy,” said Mark Rupp, EDF director for state/federal policy and affairs, ecosystems.

Agricultural conservation practice adoption levels are still insufficient to meet most federal or state targets for water quality and other environmental issues. For example, the Iowa Nutrient Reduction Strategy was developed to reduce the loads of nitrogen and phosphorus that flow from Iowa to the Mississippi River. In the five years of strategy implementation to date, Iowa has significantly expanded the adoption of cover crops -- an important best management practice for nutrient loss reduction. Cover crop acres increased from an estimated 15,000 acres in 2011 to 760,000 in 2017. Still, it is estimated that at least 10 million acres of cover crops are needed to meet the state’s goals, the NASDA/EDF report noted.

Federal and state agricultural conservation programs typically fund conservation projects through a cost-share structure in which farmers pay a percentage of the project costs and receive the rest from the public program. State agricultural conservation programs provide an additional source of funding that supplements federal funds allocated through the farm bill.

State programs are more than just an additional funding source, the report notes. They often provide more specific and targeted approaches to priority conservation needs and, importantly, allow for new policy incubation for expanded implementation at the federal level. For example, Delaware provides conservation funding that is specifically targeted to poultry operations, which constitute the largest agricultural industry in the state. In Arizona, where water scarcity is a major conservation concern, the state has focused on incentivizing water efficiency best management practices.

States have the ability to create innovative agricultural conservation programs to address a variety of financial barriers to conservation adoption in a targeted manner and also to generate funding for all kinds of conservation programs in new ways. The report is based on a review of more than 90 state-level agricultural conservation programs.

Download the full report at nasda.org/state-led conservation.