River Valley, and the Lake States of Michigan and 

 Wisconsin. The area in Northern Minnesota is next 

 to the prairie pothole region. In the Corn Belt 

 States and the Kentucky-Tennessee area, wetlands 

 comprise only about 2 percent of all land. These 

 remnant areas may be critically important for re- 

 maining wetland-dependent wildlife. Cropland was 

 the predominant land use only in the Corn Belt 

 States and the Lake States in 1982. In the Kentucky- 

 Tennessee area, a combination of forest, pasture, 

 and range dominated; in the other areas, the major 

 land use was forest. 



Conclusions and Policy Implications 



The analyses in this report support three major 

 conclusions about agricultural conversion of 

 wetlands. First, conversion to farmland was the 

 leading cause of wetland loss between the 1950's 

 and 1970's, responsible for 87 percent of a 

 13.8-million-acre net loss in wetlands. Of 78.4 

 million non-Federal wetland acres remaining in 

 1982, 59.9 million were privately owned and subject 

 to agricultural conversion. Of that, some 42.9 

 million acres could probably be farmed if con- 

 verted. However, high conversion costs and other 

 obstacles limit the number of wetland acres with 

 high and medium cropland potential to only 5.1 

 million. 



Second, wetlands are sufficiently productive, if 

 cleared and drained, to make an operating profit 

 under expected season-average market prices for 

 Government program crops. However, relatively 

 few additional acres would be profitable to crop 

 with deficiency payments from price support pro- 

 grams. The Internal Revenue Code provides income 

 tax subsidies for wetland conversion in amounts 

 that vary with the tax bracket of the operator. 

 Together, price supports and tax subsidies help off- 

 set high clearing and drainage costs, which are the 

 principal obstacles to wetland conversion. 



Third, although agricultural conversion is 

 economically feasible for some wetlands, analysis of 

 wetland values suggests that, in many cases, the 

 social benefits from intact wetlands exceed the 

 potential private returns. Further, the social benefits 

 of draining wetlands to expand cropland are likely 

 to be zero or negative if current crop surpluses con- 

 tinue. Despite that, agricultural conversion for 

 private benefit is a major threat to wetlands in six 

 of nine nationally recognized critical wetland prob- 

 lem areas. The six areas, and eight other wetland 

 problem areas, accounted for 57 percent of 

 wetlands in 1982. These 14 problem areas had 82 



percent of the wetlands judged to have high poten- 

 tial for conversion to cropland, and 63 percent of 

 the medium-potential wetlands. Since 85 percent of 

 these areas could be converted without major effort, ^ 

 Federal and State regulatory programs are not ^ 



likely to prevent their conversion. 



Denying farm program benefits to operators grow- 

 ing program crops on converted wetlands will 

 discourage conversion to the extent that benefits 

 offset fixed costs of clearing and draining. 

 However, important conversion incentives will re- 

 main in the form of tax deductions for clearing and 

 drainage investments. Tax subsidies may be more 

 important for high-bracket operators, who may be 

 less concerned with price supports. Nonetheless, 

 regardless of swampbuster sanctions or income tax 

 reforms, some kinds of wetland conversion will 

 probably continue. These include harvesting timber, 

 removing nuisance wetlands in existing fields, and 

 lowering water tables through irrigation pumping 

 and flood-control channelization. 



Enforcement of swampbuster sanctions will be dif- 

 ficult for a number of reasons. For example, identi- 

 fying wetlands has been a rather subjective under- 

 taking on which even experts have disagreed. The 

 hydric soils definition of wetlands, jointly arrived at 

 by the U.S. Fish and Wildlife Service and USDA, 

 does remove much of the arbitrary character of t' 



wetland determination. However, the exact list of ^ 



hydric soils and hydrophytic vegetation to include 

 in the definition must still be refined. 



The 1985 legislation defines "converted wetland" as 

 land converted from wetland at any time in the 

 past. Hence operators who had not cropped con- 

 verted wetland between 1981 and 1985 would lose 

 farm program eligibility, even if they had not car- 

 ried out the conversion themselves. Conceivably, 

 lands mapped as hydric soils that had been cleared 

 and drained long before for timber production or 

 other purposes would, if cropped by a subsequent 

 owner, be denied farm program benefits. 



An operator subject to the swampbuster sanctions 

 loses eligibility for farm programs on all land 

 farmed, not just converted wetland. This feature 

 creates a more powerful sanction than if eligibility 

 were denied for converted wetland alone, but also 

 sets up incentives for evasion. Small operators con- 

 templating a conversion that will marginally in- 

 crease their cropland, as is typical of conversions 

 in the prairie pothole region, probably would be 

 deterred by threatened loss of all program benefits 

 on their remaining acreage. However, larger cor- f~ 



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