State-Level Financing for Agricultural Conservation

Abstract

Agriculture has an enormous impact on environmental quality in the United States, and agricultural conservation programs have great potential to mitigate this impact. We find that state-level programs comprise approximately 40% of all agricultural conservation financing in the United States, and these programs are often more tailored towards a state’s agricultural practices and environmental needs than are federal programs. This report focuses on identifying state-level programs with non-traditional financing mechanisms. Traditional types of financing for agricultural conservation programs include federal grants (cost share) provided through the farm bill and state-level programs funded by appropriations from the state’s general fund that provide loans or grants to farmers. Innovative programs utilize transferable tax credits, revolving funds, double dividend fees and other funding and financing mechanisms that can result in greater environmental impact per dollar and don’t rely on regular appropriations of funds by state legislatures. Out of 90 state-level agricultural programs we identify 17 that utilize an innovative financing mechanism. We highlight 4 of these programs and discuss how similar programs could be applied to address specific environmental impacts due to agriculture in North Carolina.