The Economics of a Public Fund for Environmental Amenities: A Study of CRP Contracts

The problem of targeting CRP purchases to buy environmental amenities under productivity and environmental heterogeneity is considered. Gini coefficients and Lorenz curves are used to measure the effectiveness of spending under alternative targeting criteria. The environmental benefits considered are water erosion, wind erosion, surface water quality, and wildlife habitat. The three alternative targeting criteria examined include purchasing land according to (i) the benefit-to-cost ratio, (ii) the level of benefits, and (iii) the level of cost. Results indicate that the degree of variability and correlation determine the extent to which suboptimal targeting achieves a significant portion of available environmental benefits. Copyright 1996, Oxford University Press.