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The Effect of Conservation Priority Areas on Bidding Behavior in the Conservation Reserve Program
- Land Economics
- University of Wisconsin Press
- Volume 90, Number 1, February 2014
- pp. 1-25
- Article
- Additional Information
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We explore how a landowner's bid to enroll in the Conservation Reserve Program (CRP) is influenced by his parcel's designation as a Conservation Priority Area (CPA). A theoretical model of a landowner's optimal bid is presented, and we demonstrate the ambiguity in a landowner's optimal bid response to CPA designations. The bid choice is analyzed using a data set of accepted and unaccepted offers during three CRP sign-up periods. We focus empirically on a subset of offers from the Prairie Pothole CPA to identify whether bid responses to exogenous location factors differ across landowners with varying opportunity costs to enrollment. (JEL Q15, Q18)