Few federal programs have the bipartisan goodwill of the Natural Resources Conservation Service’s voluntary conservation programs for farmers, ranchers, and foresters. These programs help keep farmers farming while stewarding some of our country’s greatest assets: soil and water. They are also incredibly oversubscribed, with two-thirds to three-quarters of applicants turned away each year.
More farmers could benefit from these programs, but government-set payment rates prevent applicants from offering to undertake conservation projects for less. That limits how far scarce conservation dollars can go. Congress could stretch those dollars further—funding more farmers and conservation without spending more taxpayer dollars—by using reverse auctions, which let applicants compete for contracts based on the payment they are willing to accept.
The largest of these programs is the Environmental Quality Incentives Program (EQIP), which pays farmers to adopt specific conservation practices. Like other NRCS programs, it is voluntary and locally led, providing financial and technical assistance through agency staff and partners. The agency sets the payment rate for each practice—including cover crops and riparian buffers—based on the average cost of implementing them, with payments covering up to 75 percent to 90 percent of the cost. Farmers willing to undertake conservation practices for less, however, have no way to offer a lower price.
Reverse auctions offer a solution. In a reverse auction, one buyer accepts bids from many sellers, and sellers compete by offering the best deal. For conservation programs, NRCS is the buyer, and farmers and ranchers are the sellers competing for a fixed pool of Farm Bill dollars. A reverse auction rewards farmers who can deliver conservation benefits at lower cost, allowing limited funding to support more projects.
EQIP once allowed something similar. Prior to the 2002 Farm Bill, applicants could compete on both costs and environmental benefits. They could offer extra conservation or ask for less than the maximum cost-share to make their application more competitive. At the time, the maximum cost-share was 75 percent for structural practices like waste storage and fencing and 100 percent of the county’s maximum rate for management practices like planting cover crops and adopting no-till farming.
When farmers were allowed to compete on price, applicants routinely bid well below the maximum cost-share. Between 1996 and 2001, the average accepted cost-share for structural practices was 35 percent and 43 percent for management practices—meaning farmers were willing to implement them for less than half of the program’s maximum payment. This isn’t surprising. Conservation practices can deliver on-farm benefits, such as reduced labor and fuel costs and increased feed and water efficiency, so farmers are often willing to adopt these practices for less than what it would cost to implement them. After the 2002 Farm Bill eliminated cost-based bidding, the average cost-share for structural practices jumped to about 60 percent.
The 2002 Farm Bill eliminated EQIP’s original mandate to maximize environmental benefits per dollar spent and barred NRCS from giving preference to lower-cost bids. One concern was that larger agricultural operations with more money could outbid small farmers. Another was that competitive bidding could push farmers to promise more than they could deliver, adding practices to their applications to boost their environmental-benefits score. After approval, however, 17 percent of contracts dropped one or more promised practices. Auctions can also create more work for farmers and NRCS staff, which can discourage participation if the process becomes too complex.
These concerns are understandable. But these problems suggest a need for better auction design, not an end to competitive bidding.
The USDA’s Economic Research Service has explored ways to address many of these concerns in its simulations and studies. A well-designed auction could group farms by size or set aside funding for small and beginning farmers to ensure they aren’t crowded out by larger ones. The bidding process should be easy to navigate and low-risk to farmers, while also ensuring that bidders cannot drop promised conservation practices after receiving payments for them. Auctions should also avoid hard payment caps that might discourage landowners with high-value conservation opportunities. And rotating auctions across regions and conservation practices could help keep bids competitive, rather than allowing bids to trend toward previous winning prices.
Restoring cost-based bidding would require Congress to amend 16 U.S.C. § 3839aa-2(c), which prohibits the Secretary of Agriculture from giving an application higher priority if it costs less than a comparable one. Congress should strike that provision and restore the program’s original goal of maximizing environmental benefits per dollar. For a taxpayer-funded program that turns away most of its applicants, this would be a win for both fiscal responsibility and conservation.
NRCS could use the Conservation Innovation Grants (CIG) within EQIP to test reverse auctions in a handful of counties and states. Pilot projects could give NRCS the evidence needed to expand this approach. A 2007 CIG-funded reverse auction in Pennsylvania’s Conestoga watershed let farmers bid on cutting phosphorus runoff and ranked their offers by the amount of reduction they achieved per dollar spent. The pilot yielded about seven times more phosphorus reduction per dollar than regular EQIP spending in the same watershed over the same period.
Finally, NRCS should build on its current work using AI to speed up conservation planning. Tools that help farmers price their offers and help staff score them would keep auctions from becoming a drain on agency time and money.
As a taxpayer with deep appreciation for our country’s farmers, ranchers, and foresters, I’m glad to support these programs. But those dollars should go as far as they can, reaching as many applicants and buying as much conservation as possible. Restoring reverse auctions is a common-sense, proven way to do so.
