the net present value of a group of hypothetical farms. Investing in farmland 

 drainage raised the net present value of the model farms, even though they were 

 unable to participate in various Federal farm programs because of swampbuster. 



Goldstein and Wilen raise some interesting objections with regard to 

 extrapolating the results of the computer simulation runs to the entire 

 agricultural sector of the U.S. economy. They point out that the swampbuster 

 legislation penalizes a farmer who drains an on-farm wetland by making it 

 impossible for him to participate in various Federal farm programs during any 

 year in which he plants crops on the drained land. The sanction is severe in 

 that it applies to all farms owned by a farm operator. Failure to include 

 multiple farms operated under single person or family ownership imparts a 

 downward bias in the quantitative estimates of the overall impact of swampbuster 

 reported by McColloch, Richardson, and Wissman. According to Goldstein and 

 Wilen, multiple farm ownership is fairly common. 



Swampbuster should be most effective in regions of the U.S. that have a 

 high ratio of uplands acreage in crop production relative to the acreage of 

 existing on-farm wetlands. It should also be most effective in the regions of 

 the country that have a high participation rate in Federal farm programs. Both 

 considerations--high participation rate and favorable uplands to wetlands 

 ratio--are applicable to the prairie pothole region. Goldstein and Wilen also 

 point out that net present value is only one index of the net returns to farming 

 because farming is a risky activity. The reduction in risk from participation 

 in the Federal farm programs is an important benefit that is not captured in the 

 net present value calculations. 



All of the drainage activity in the model occurs in the first year of the 

 10-year simulation run. Capital markets are not perfect, however, and the on- 

 farm wetlands would more likely be drained over a long period of time. 

 Swampbuster legislation would be more effective in preventing a series of 

 staggered wetlands drainage investments by a farmer than it would be in 

 preventing drainage by a farmer whose net worth positions enabled him to drain 

 all of his wetlands in one year. But this last consideration, the timing of 

 drainage investment activity, raises an issue that was neglected by McColloch 

 et al . {[81]), as well as by Goldstein and Wilen. The swampbuster legislation 

 allows the farmer to participate in Federal farm programs when agricultural 

 product prices are low, and plant crops on his former wetland acreage when prices 

 are high, because sanctions apply only during a year in which the farmer plants 

 annual crops on the drained wetland acreage. 



81. McColloch, P., D.J. Wissman, and J. Richardson. 1987. An assessment of 

 the impact of Federal programs on prairie pothole drainage. National 

 Wetlands Newsletter 9(4):3-6. 



McColloch et al . examine the effectiveness of the swampbuster provisions 

 of the Food Security Act of 1985 for farms in the prairie pothole region of the 

 Great Plains. The prairie pothole region of the U.S. covers about 60,000 square 

 miles; in conjunction with the prairie pothole region of Canada it provides the 

 bulk of the migratory waterfowl habitat of North America. Prairie pothole 

 wetlands and adjacent uplands (which are sometimes said to form a wetlands- 

 uplands complex) are also alleged to provide important habitat for such 



59 



