THE EFFECT OF AGRICULTURAL POLICIES ON LAND-USE AND ENVIRONMENTAL-QUALITY

In this paper I consider the environmental quality gains that may be a chieved by reducing agricultural income supports. A new methodology is developed to estimate land use shares. In an application to Wisconsin , milk price support reductions result in shifts of marginal agricultu ral land to forest, reducing soil erosion and providing off-site water quality improvements. The environmental benefits are estimated to be at least as large as the decreased welfare burden on consumers and tax payers, indicating a central role for environmental quality considerat ions in motivating policy reforms and a more efficient means of achiev ing the environmental quality goals of land retirement programs.