Report by the INSTITUTE FOR SCIENCE, TECHNOLOGY AND PUBLIC POLICY George Bush School of Government and Public Service ECOLOGICAL, ECONOMIC AND POLICY ALTERNATIVES FOR TEXAS RICE AGRICULTURE September 25, 2000 Funded by TEXAS WATER RESOURCES INSTITUTE TR-181 Alston, L.T., Lacher, T.E., Slack, R.D., Vedlitz, A., Woodward, R.T., Franklin, J.C., Canzoneri, N., Torres Conkey, A.A., Cowman, D.F., Harris, J., Henry, A., Kennedy, E., Krohn, M.R., Mizell, K., Nicholson, J., Tierce, K., and Wui, Y. (2000). Ecological, economic, and policy alternatives for Texas rice agriculture. A report by the Institute for Science, Technology and Public Policy in the George Bush School of Government and Public Service to the Texas Water Resources Institute/Agricultural Program, Texas A&M University System. (TWRI Report TR-181). This work may not be reproduced in its entirety, nor in part, without the knowledge and permission of its authors. INSTITUTE FOR SCIENCE, TECHNOLOGY AND PUBLIC POLICY A nonpartisan, interdisciplinary public policy research institute. FACULTY RESEARCHERS Letitia T. Alston, Ph.D. • Institute for Science, Technology and Public Policy Thomas E. Lacher, Ph.D. • Wildlife and Fisheries Sciences R. Douglas Slack, Ph.D. • Wildlife and Fisheries Sciences Arnold Vedlitz, Ph.D. • Political Science • Institute for Science, Technology and Public Policy Richard T. Woodward, Ph.D. • Agricultural Economics POST-DOCTORAL RESEARCH ASSOCIATE James C. Franklin, Ph.D. • Political Science • Institute for Science, Technology and Public Policy RESEARCH ASSISTANTS Nicole Canzoneri • Political Science April Ann Torres Conkey • Wildlife and Fisheries Sciences Deborah F. Cowman • Wildlife and Fisheries Sciences Jeanine Harris • Political Science April Henry • Wildlife and Fisheries Sciences Elizabeth Kennedy • Forestry Sciences Michelle R. Krohn • Institute for Science, Technology and Public Policy Kelly Mizell • Wildlife and Fisheries Sciences Jill Nicholson • Institute for Science, Technology and Public Policy Kelly Tierce • George Bush School Public Service and Administration Yong-Suhk Wui • Agricultural Economics RESOURCES PROVIDED BY Institute for Science, Technology and Public Policy Texas Water Resources Institute Texas Agricultural Experiment Station INSTITUTE FOR SCIENCE, TECHNOLOGY AND PUBLIC POLICY George Bush School of Government and Public Service • Texas A&M University • College Station, TX 77843-4350 phone: (979) 862-8855 fax: (979) 862-8856 [email protected] executive summary RESEARCH OBJECTIVES An interdisciplinary research team, working in collaboration with and under the auspices of the Institute for Science, Technology and Public Policy in the George Bush School of Government and Public Service at Texas A&M University, conducted a two-year research project entitled Ecological, Economic, and Policy Alternatives for Texas Rice Agriculture. This project was sponsored by the Texas Water Resources Institute (TWRI). Principal investigators were Dr. Letitia T. Alston, Dr. Thomas E. Lacher, Dr. R. Douglas Slack, Dr. Arnold Vedlitz, and Dr. Richard T. Woodward. They were assisted by Dr. James C. Franklin, post-doctoral research associate, and the following research assistants: Nicole Canzoneri, April Ann Torres Conkey, Deborah F. Cowman, Jeanine Harris, April Henry, Elizabeth Kennedy, Michelle Krohn, Kelly Mizell, Jill Nicholson, Kelly Tierce, and Yong-Suhk Wui. The objectives of this research were: (1) to develop a reliable first estimate of the environmental consequences of reduction in rice acreage; (2) to analyze economic consequences of changes in rice acreage that may occur due to the changes in the system of price supports; and (3) to critically review existing policy and explore the kinds of institutional arrangements that might be developed to encourage the preservation of the environmental amenities provided by rice farming. RICE INDUSTRY OVERVIEW In Texas, rice is a flood-irrigated crop grown in coastal prairies and marshes, located primarily in the region adjacent to the Gulf of Mexico. In addition to its agricultural value, rice is linked to a surrogate wetland system that provides at least some of the ecological services that have been lost as natural wetlands have given way to residential and commercial development. Currently the rice industry is facing significant challenges that include the following: • If government subsidies are not included in the calculations, rice sales along the Texas Gulf Coast have, on average, been unable to cover all the costs of ownership and production for many years. • The viability of rice farming is being affected by changes to the system of commodity price supports, as a result of the 1996 Farm Bill. • Urban expansion and increasing competition over water resources are negatively impacting rice production. • The infrastructure that supports rice drying, milling, and transport is also declining, and the potential for a rapid and abrupt change in rice agriculture because of this decline is a significant risk to the industry. It is believed that the impact from these market and public policy forces will probably result in further reductions in rice cultivation. This decrease has an associated environmental impact because of the potential loss of ecological services that are a by-product of the farmed wetlands on which rice is grown. Rice fields serve as over-wintering grounds for vast numbers of migratory birds and also provide recreational activities such as hunting and bird watching. Since most of the environmental benefits and costs accrue to society rather than to the rice farmers themselves, policies, regulations, and/or agreements are needed that identify the social value of these positive ecological services and that also create incentives for rice farmers to be involved in their continuation. ECOLOGICAL ANALYSIS AND FINDINGS To conduct the ecological analysis, long-term data sets on rice acreage and migratory birds from government and non-government sources were collected and statistically analyzed. Prior to this study, the extent of the role that the rice-cropping system plays in the ecology of migratory birds had not been documented for either the southern U.S. or Texas. It was found that the rice-agronomic system produces a Institute for Science, Technology and Public Policy i executive summary variety of habitats used by a rich diversity of migratory birds during an annual cycle. It was also found that declines in waterfowl and northern bobwhite numbers were correlated with declines in rice acreage. However, some wetland-dependent birds and some ground foraging birds exhibited stable trends or have increased in numbers during the same period of study. The data available to analyze these trends reflect only large-scale populations and broad geographic patterns. In addition, there are few data available to look at the relationships of specific bird population responses to rice-cropping practices and changes in rice acreage. The resolution of the impact of rice agriculture on biodiversity will require research designed to specifically answer this question. Rice agriculture is highly dependent on water, and like most agricultural production, high rice yields depend in part on the use of fertilizers and pesticides. The Texas Natural Resource Conservation Commission (TNRCC) has identified 142 impaired water segments in the state that do not meet water quality standards. Of these, 81 fall within Texas rice-belt river basins, although it is not possible at this point to attribute these effects to rice agriculture. To date, Texas has not attempted any statewide evaluation of the impact of rice agriculture on water quality. Return flows from irrigated agriculture are nonpoint sources of pollution and so are not regulated. ECONOMIC ANALYSIS AND FINDINGS The economic implications of the recent changes in the farm program were studied using a retrospective analysis of the sector. The rice production system provides a variety of market and non-market goods and services. Obviously, the primary output of this system is rice. It is valued by consumers, generates profits for the producers, and employment and revenue for a host of related industries. Using averages for Gulf Coast rice producers, it was found that if not for government subsidies, rice farming would have been unprofitable for many years. On average, therefore, the true economic contribution of this activity is small and perhaps negative since the costs exceed the benefits expressed by the market. Of course, the averages hide variability in which some farmers have consistently produced valuable output and made significant profits. In addition to farming, ricelands are used for recreational hunting and bird watching. Landowners earn some income by leasing their land to hunters and guide operations. While small relative to operating expenses, this bit of revenue can mean the difference between a profitable and unprofitable year for some farmers. The market for bird watching is still new and has yet to generate much income for riceland owners. While some have speculated that this market may be a substantial source of income, recent studies suggest that the market for serious bird watching is quite limited, meaning that markets will not capture most of the non-consumptive benefits of wildlife. Little is known about the magnitude of the non-market benefits of rice. Using an analysis of valuation studies of natural wetlands, it was found that wildlife habitat, a service that is also provided by ricelands, can be quite valuable