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

The Conservation Reserve Program (CRP) pays farmers about $2 billion per year to retire cropland under ten- to fifteen-year contracts. Recent research by <link rid="b3">Wu (2000)</link> found that slippage-an unintended stimulus of new plantings-offsets some of CRP's environmental benefits. In a comment on Wu, we argued CRP enrollments were endogenous and confounded by omitted variables. In his reply, <link rid="b4">Wu (2005)</link> used results from a Hausman test to argue that CRP enrollments are exogenous. In this rejoinder, we explain why the candidate instrument (erodibility) is likely confounded by omitted variables, so Wu's use of the Hausman test is uninformative. Copyright 2006 American Agricultural Economics Association.