Appendix 2— Two Hypothetical Farms 



North Carolina Pocosiiu. This farm is based 

 primarily on conversion costs and operating data 

 collected by Arthur Daugherty and Doug Lewis 

 (Econ. Res. Serv., U.S. Dept. Agr.) in interviews 

 with farm operators and drainage contractors in 

 North CaroUna. Supplemental 1982 agricultural cen- 

 sus data and average 1982 crop budgets from the 

 Federal Enterprise Data System (FEDS) were also 

 used. A tax simulation model representing in- 

 dividual returns was used as an analytical 

 framework, but many larger operations, for which 

 taxes may be an important consideration in wetland 

 conversion, are corporations. 



Assumptions: 1,000-acre cash-grain farm converting 

 320 acres of pocosins. 



The 320-acre conversion is assumed sold in the 

 10th year. The current dry cropland price of $1,350 

 per acre is almost $1,000 less than the break-even 

 liquidation price of $2,315 needed to achieve the / ^ 

 same after-tcuc income as before conversion. ^ 



Details of the net present value (NPV) and total 

 year 1-10 columns of the tax model are shown in 

 appendix table 1. 



North Dakota Prairie Pothole. This farm is based 

 on descriptions of farming in the region in Nelson, 

 and others [27] and on representative farms in Bar- 

 rows, and others (5). Supplemental data from 1982 

 agricultural census and average 1982 FEDS crop 

 budgets were also used. 



Production costs 

 per acre: 



Variable costs 

 Fixed costs 



(excluding 



conversion) 

 Total 



rotation 



Prices and yields: 



Season-average per 



bushel 

 Target (loan 



for soybeans) 



1st year bushels per 



acre 

 2nd year 

 3rd and subsequent 



years 



Conversion costs 

 per acre: 



Acquisition 



Drainage — 

 Surveying 

 Pump station 

 Canals and V- 



ditches 

 Culverts and 

 roads 



Clearing 



Land development 



Soil amendment 



Total 



Com Soybeans/wheat Rotation 

 (double cropped) average 



$168.24 $186.35 $179.11 



Assumptions: 1,170-acre wheat farm converting a 

 lO-acre pothole wetland. 



87.49 



255.73 



.40 



$2.50 

 3.03 



100 

 125 



150 



123.13 



309.48 



.60 



$5.84/$2.57 

 5.02/ 4.38 



25/30 

 30/35 



35/40 



$200.00 



11.30 

 131.92 



156.26 



30.69 



744.99 



157.02 



147.00 



1,579.18 



108.87 



287.98 



1.00 



Production costs 

 per acre: 



Variable costs 



Fixed costs (excluding 



conversion) 

 Total 



Prices and yields: 



Season-average per 



bushel 

 Target 



1st and subsequent years 

 bushels per acre 



Conversion costs 

 per acre: 



Acquisition 



Drainage- 

 ditching 

 Total 



Vy^eat 



$51.78 



74.81 

 126.59 



$2.87 

 4.38 



35 



$0.00 assumed 

 owned 



187.20 

 187.20 



(^ 



The 10-acre conversion is assumed sold in the 

 tenth year for $600 per acre. 



Details of the net present value (NPV) and total 

 year 1-10 columns of the tax simulation model are 

 shown in appendix table 2. 



30 



