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Abstract

Conservation reserve program (CRP) payments amount to several billion dollars annually. Payments are allocated to both remove land from production and to help farmers pay for conservation improvements. However, research examining whether farmers increase their utility with CRPs is limited. This paper uses simulation analysis and certainty equivalents to compare farming income to payments under the CRP. Farming income is a combination of crop production and government payments as specified in the 2002 Farm Bill. This analysis focuses on farms in three different counties in Kentucky. Results indicate that CRPs are good choices for many farmers.

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