Compensating Producers for Land Stewardship Services that 
Provide Multiple Public Benefits

Project Title

Farmland Stewardship Initiative – FSI

Executive Summary

Farms and ranches produce much more than food, fuel, and fiber.  They also provide land-stewardship services—flood mitigation, protection of water quality, management of wildlife habitat and biodiversity, outdoor recreation, and tourism, to name a few.  FSI would compensate producers for voluntary stewardship services on private farmland and rangeland that provide multiple public benefits to American taxpayers as a whole. 

Administered by USDA in consultation with FEMA, FSI would pilot a watershed-based, one-stop shopping policy to support integrated practices to store, slow, or absorb water on the land that help reduce flood damages downstream.  Measures that manage runoff from snowmelt and rainfall are multi-functional in that they also mitigate the effects of drought, improve water quality, reduce soil erosion, conserve and restore habitat, enhance local recreation and tourism, and capture organic carbon that would otherwise add to atmospheric carbon dioxide concentrations.  FSI options would include incentive payments for no-till production; easement and contract payments for restoration of grassland, wetland, woodland and riparian areas and buffers; and cost-share for construction of small and micro-scale water storage and retention.  FSI’s broad mix of integrated land stewardship practices would optimize a host of public benefits to agriculture, flood mitigation, the environment, local economies and communities. 

FSI’s proposed one-stop, multifunctional approach would simplify and streamline existing USDA conservation programs (e.g., CRP, EQUIP, Wetlands Reserve Program, EWP, Small Watersheds Program, Farmland Protection Program) by consolidating them into a common set of criteria and regulations and a single conservation plan and payment for participating producers.  FSI pilots would also encourage partnering with other federal and state agencies and their programs, such as with EPA and its 319 water quality funds. 

Five FSI pilots are proposed in the following (sub)watersheds subject to extreme flooding and presidentially-declared disasters:

•         Two Red River of the North tributaries, one each in Minnesota and North Dakota;

•         the Day County region or Vermillion River Basin of South Dakota; and

•         watersheds to be identified in California and Vermont.

In these watersheds or subwatersheds of them, USDA and partner agencies will:

•         Consolidate existing USDA conservation programs into one pilot program with uniform objectives, eligibility requirements and regulations that allow neighboring producers to manage their operations collaboratively for multiple objectives on a watershed scale;

•         Maximize agricultural productivity and income by providing payments for restoration of wetlands, woodlands, permanent cover and buffers on farm and range land and for conservation tillage practices that reduce runoff and soil erosion;

•         Promote flood mitigation measures and proper floodplain management to reduce the adverse effects of flood disasters;

•         Promote integrated measures to improve water quality, enhance conservation and provide recreational opportunities;

•         Monitor and evaluate the impact of integrated land management practices on the ability of soils, riparian areas and other terrestrial systems to sequester carbon; and

•         Involve diverse public and private stakeholders in local pilot design and implementation.

Importance to Pilot Areas

Repetitive flooding in these designated watersheds has rendered productive agriculture unprofitable and, in some cases, impossible.  In the Red River of the North Basin alone, repetitive flooding of agricultural lands has cost producers and taxpayers well over $1 billion in losses during the past decade, further deepening an already profound farm crisis.  At the same time, tillage and drainage practices in non-flood prone areas of this and other watersheds have, at best, failed to contribute adequately to downstream flood mitigation and, at worst, have actually exacerbated flooding that has cost billions in agricultural and urban losses.   

By providing multifunctional payments for alternative uses of flood-prone lands and for better management practices on remaining private agricultural lands in these watersheds, FSI would boost urgently needed farm income and reduce flood-related losses, thus increasing profitability.  It would also begin to test and model a new approach to agriculture that allows farmers and ranchers to be part of the solution for comprehensive watershed flood mitigation and natural resource enhancement. 

Importance to the Federal Government

FSI provides an attractive policy response to growing challenges facing American agriculture.  Agricultural commodities are currently in surplus, while essential services of land stewardship are in deficit.  Historically low commodity prices, drought and flood disasters, and persistent crop diseases threaten the livelihoods of agricultural producers.  Meanwhile, the American public increasingly demands from the federal government flood mitigation, environmental and recreational services that farmers and ranchers can and are willing to provide. 

By creating a market for voluntary stewardship of private agricultural lands, FSI would increase and diversify farm and ranch income and provide alternatives to high-risk, low-margin production on flood-prone and environmentally sensitive land, without distorting commodity markets or harming relationships with international trading partners.  In return, FSI’s multi-functionality offers diverse non-commodity benefits for the non-agricultural, taxpaying public. 

FSI reduces the complexity of existing federal farm programs.  Currently, producers must negotiate many different programs administered for conservation, water quality, and other stewardship purposes. This discourages participation, increases administrative costs, and reduces interagency collaboration.  FSI’s multi-functional, one-stop approach would encourage producers to collaborate on a watershed scale, facilitate partnering among federal agencies and support a broad menu of management options to apply flexibly within a watershed. 

Funding Request

$25 million is requested for FY 2002 from [   ] with $5 million appropriated to each pilot.  

Funding History

$25 million was sought for FY 2001 through VA, HUD and Other Agencies, but not appropriated. 

Contacts

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Groups in Support of FSI

FSI was developed through a two-year collaborative effort to address basinwide flood losses in the Red River of the North Basin.  This effort brought together government, private-sector and nongovernmental agricultural and conservation interests from the states of Minnesota, North Dakota and South Dakota, in consultation with EPA, FEMA and USDA officials and congressional staff.  FSI was first suggested as a result of basinwide community meetings of citizens and later reviewed and endorsed through a further round of citizens consultations.  It enjoys widespread backing from agricultural producers, conservation and recreation interests.