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Slippage in the Conservation Reserve Program or Spurious Correlation? A Comment
Author(s) -
Roberts Michael J.,
Bucholtz Shawn
Publication year - 2005
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.1111/j.0002-9092.2005.00715.x
Subject(s) - spurious relationship , endogeneity , slippage , economics , econometrics , conservation reserve program , autocorrelation , correlation , statistics , geography , mathematics , financial economics , archaeology , agriculture , geometry
Abstract The Conservation Reserve Program (CRP) pays farmers about $2 billion per year to retire cropland under ten‐ to fifteen‐year contracts. Recent research by Wu found that slippage—an unintended stimulus of new plantings—offsets some of CRP's environmental benefits. Wu does not account for the endogeneity of CRP enrollments. Furthermore, the data used by Wu cannot be used to estimate slippage arising from a price feedback effect. We replicate Wu's findings, demonstrate the possible presence of spurious correlation, and construct new estimates with corrections for endogeneity and other econometric problems. We find no convincing evidence of slippage.