Slippage in the Conservation Reserve Program or Spurious Correlation? A Comment

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. Copyright 2005 American Agricultural Economics Association.