services, on the one hand, and efforts to increase production of food, fiber, and most recently, bioenergy, on the other. Historically, agricultural policies and programs have emphasized agricultural commodity production. More recently, Congress and the U.S. Department of Agriculture (USDA) have created and implemented agricultural programs that facilitate conservation of land and water resources, but these programs generally have received far less emphasis than crop production incentives. Nevertheless, the balance between these two goals has been shifting. Many farmers today across the river basin are seeking ways to improve farming and production efficiencies, while at the same time seeking to increase environmental benefits. These latter benefits can also be viewed as a type of “commodity,” albeit a nontraditional one.

This chapter discusses agricultural production and conservation programs, including strategies for reducing sediment and nutrient loadings within the context of the Clean Water Act and through federal and state agriculture-related initiatives. It identifies and describes existent and emerging regulatory, incentive-based, and market-based approaches for reducing nonpoint inputs. It also provides recommendations for ways in which the states, the USDA, and the Environmental Protection Agency (EPA) might strengthen cooperative efforts to improve water quality through agricultural programs and actions.

TENSIONS BETWEEN AGRICULTURAL PRODUCTION AND WATER QUALITY

The Farm Bill

The Agricultural Adjustment Act of 1933 established a time-honored tradition in American agriculture: the notion that it is necessary to control the supply of agricultural commodities in order for farmers to receive a fair price for their goods (Cain and Lovejoy, 2004). The act pursued this goal by setting price supports, or parity prices, to guarantee that prices did not fall below a set level. This price support was available to producers who participated in voluntary production reduction programs, such as acreage set-asides. Early farm bills defined a pattern of government involvement that still holds today: voluntary participation based on economic incentives through income or price support and payments for specific actions. Today, most government payments subsidize producers of commodity program crops such as corn, wheat, soybeans, cotton, rice, and peanuts.

Commodity payments and price supports can lead to more extensive and intensive production than would be the case if there were none, because these mechanisms give farmers an economic incentive to expand actual and potential crop production. However, these rational responses to the Farm



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