Agricultural Conservation:

USDA's Environmental Quality Incentives Program Could Be Improved to Optimize Benefits

GAO-17-225: Published: Apr 13, 2017. Publicly Released: May 15, 2017.

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Agricultural production can have harmful effects on natural resources, such as when animal waste runs off into waterways. Conservation practices like installing structures to store animal waste can help mitigate these effects. USDA's EQIP provides financial and technical help to landowners who voluntarily implement conservation practices.

We found that, although EQIP spent almost $5.7 billion during fiscal years 2009-2015, the program could improve its use of these funds to optimize environmental benefits. We recommended that EQIP use better information and tools to more effectively target EQIP funds and evaluate program applications.

EQIP Financial Assistance Obligations by State, Fiscal Year 2015

Map of the United States showing how EQIP funds are allocated by state.

Map of the United States showing how EQIP funds are allocated by state.

Additional Materials:

Contact:

Steve D. Morris
(202) 512-3841
morriss@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

What GAO Found

For fiscal years 2009 through 2015, the U.S. Department of Agriculture's (USDA) Natural Resources Conservation Service (NRCS) obligated almost $5.7 billion under its Environmental Quality Incentives Program (EQIP) for 219 types of conservation practices to address a variety of environmental concerns in all 50 states. These concerns included water quality and grazing land degradation. By law, NRCS is directed to, among other things, spend at least 60 percent of EQIP funds on livestock-related practices. These practices include installing waste storage facilities to limit damage to water quality and drafting plans to alternate grazing land use between grazing and resting to reduce degradation to the land.

Although EQIP is to optimize environmental benefits, among other things, under the current law, NRCS processes for allocating EQIP funds are not sufficient to optimize such benefits. Based on its review of NRCS's national process and its analysis of agency data, GAO found that the process for allocating EQIP funds to state offices was not based primarily on environmental concerns. NRCS guidance says that allocations to state offices should be based on environmental concerns data, among other things. In practice, national allocations are influenced primarily by historical funding amounts, partly because relevant, practical data on environmental concerns are not always available. Studies by USDA's Conservation Effects Assessment Project (CEAP), a multiagency effort with partners within and outside of USDA, that attempt to quantify the environmental effects of conservation practices have provided data on some environmental concerns but have not generally considered practical constraints, such as budget and statutory requirements. So their results are not always practical for EQIP program managers to use. CEAP leaders said they are beginning to design studies with such constraints in mind. Under federal standards for internal control, management should internally and externally communicate the necessary quality information to achieve the entity's objectives. By having EQIP program managers coordinate with CEAP leaders to ensure that CEAP studies consider practical constraints, the studies could provide NRCS with better information to target EQIP funds to optimize environmental benefits.

NRCS processes for selecting EQIP applications vary by state office and are not all sufficient to optimize environmental benefits. By law, applications are to be prioritized based on factors including their cost-effectiveness. To evaluate applications, NRCS uses ranking tools with a standard formula to calculate an application's cost-effectiveness, which is worth 10 percent of the total points possible. NRCS state and local offices develop questions in EQIP ranking tools, which together account for 65 percent of an application's score, and these questions are sometimes unrelated to environmental benefits. Given its low percentage, cost-effectiveness has little effect on which applications are funded, according to some agency officials. In some cases, applications with a cost-effectiveness score of zero were funded in fiscal year 2015. For example, an Arkansas application was funded that scored 20 out of 1,000 points, cost $59,000, and had a cost-effectiveness score of zero. By modifying guidance and ranking tools so they more accurately value an EQIP application's anticipated environmental benefits relative to estimated costs, NRCS could better ensure that it funds the most cost-effective applications.

Why GAO Did This Study

Agricultural production can have harmful effects on natural resources, such as when sediment, fertilizer, and animal waste run off into the nation's waterways. Conservation practices, such as installing structures to store animal waste or changing the amount of fertilizer applied to cropland, can help mitigate these effects. NRCS's EQIP provides financial and technical assistance to landowners who voluntarily implement conservation practices on agricultural land or certain forestlands. The Food Security Act of 1985, as amended, states that one purpose of EQIP is to optimize environmental benefits.

GAO was asked to review whether EQIP funds are targeted where they will deliver the greatest environmental benefit. This report examines the distribution of EQIP obligations for fiscal years 2009 through 2015 and the extent to which EQIP processes for allocating funding and selecting applications are sufficient to optimize environmental benefits. GAO reviewed NRCS documents, analyzed data for fiscal years 2009 through 2015 (the most recent data available), and interviewed NRCS officials.

What GAO Recommends

GAO is making four recommendations, including that NRCS direct EQIP program managers to coordinate with CEAP leaders to develop and use better information for targeting EQIP funds and modify guidance and ranking tools for evaluating EQIP applications. NRCS neither agreed nor disagreed with these recommendations but described steps it is planning or taking to address them.

For more information, contact Steve D. Morris at (202) 512-3841 or morriss@gao.gov.

Recommendations for Executive Action

  1. Status: Open

    Comments: Agency has not taken action.

    Recommendation: To help achieve EQIP's purpose of optimizing environmental benefits, the Secretary of Agriculture should direct the Chief of the Natural Resources Conservation Service to direct EQIP program managers to coordinate with the leaders of USDA's CEAP to help ensure that CEAP studies consider the practical limitations and trade-offs faced by program managers and to provide program managers with better information to target EQIP funds where they will optimize environmental benefits.

    Agency Affected: Department of Agriculture

  2. Status: Open

    Comments: Agency has not taken action.

    Recommendation: To help achieve EQIP's purpose of optimizing environmental benefits, the Secretary of Agriculture should direct the Chief of the Natural Resources Conservation Service to revise guidance on state offices' EQIP allocation processes, stipulating that data on environmental concerns, where available, should be a primary factor influencing allocations within states.

    Agency Affected: Department of Agriculture

  3. Status: Open

    Comments: Agency has not taken action.

    Recommendation: To help achieve EQIP's purpose of optimizing environmental benefits, the Secretary of Agriculture should direct the Chief of the Natural Resources Conservation Service to establish a review process at the regional level for review and concurrence of EQIP payment rates above a threshold (e.g., rates greater than 50 percent, with justification).

    Agency Affected: Department of Agriculture

  4. Status: Open

    Comments: Agency has not taken action.

    Recommendation: To help achieve EQIP's purpose of optimizing environmental benefits, the Secretary of Agriculture should direct the Chief of the Natural Resources Conservation Service to modify guidance and ranking tools so that they more accurately value an EQIP application's anticipated environmental benefits relative to estimated costs.

    Agency Affected: Department of Agriculture

 

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