Natural resource and environmental policy trade-offs: a CGE analysis of the regional impact of the Wetland Reserve Program

There are perceived fundamental conflicts between agriculture, in terms of land use, and the societal goals of sustained environmental quality improvements. Regulatory policy response is often criticized for having the potential of adversely affecting agricultural production and the economy. The Wetland Reserve Program (WRP) is intended to be an alternative approach, aiming to improve environmental quality without significantly impacting the agricultural production or the economic wellbeing of the concerned regions. Using a computable general equilibrium modeling approach, we examine the impact of the WRP on the regional economy of Louisiana. Results show no significant negative impact on the economy as a whole, but effects on particular sectors within the economy may differ significantly.