Summary

This report takes a close look at the Environmental Quality Incentives Program (EQIP), a farmer-focused conservation cost-share program run by the Natural Resources Conservation Service (NRCS) of the United States Department of Agriculture (USDA). In the report, we examine the agricultural practices that EQIP helps farmers finance, how much funding went toward these practices in Fiscal Year (FY) 2023, including additional funding through the Inflation Reduction Act, and the practices’ relationships with NRCS’ list of “climate-smart” agriculture and forestry practices, called the Climate Smart Agriculture and Forestry (CSAF) list. This report builds on previous IATP reports focused on EQIP spending: Payments for Pollution (2022) and Waste and Water Woes (2023).

We find that, despite nearly two-thirds of farmer applicants being turned away from EQIP, disproportionate shares of program dollars go toward high-cost practices that have little to no climate or conservation benefit. This report includes spending data on the first year farmers have received additional funding from the Inflation Reduction Act (IRA), which dedicated roughly $250 million to EQIP in FY23, with a total of $8.45 billion to be spent on the program by FY31.¹ While EQIP is not, by nature, an agroecological program, it and other NRCS programs can be a gateway to agroecology for many U.S. farmers.² We conclude that reforms are needed to promote cost-effective and climate-effective agricultural strategies so that as many farmers as possible can build climate resilience and reduce emissions on their farm.

What is EQIP?

EQIP is a conservation cost-share program that reimburses farmers and landholders for environmental practices they install on their farm. Created in the 1996 Farm Bill, the program is intended to provide a gateway for first-time conservationists to address resource concerns on their land.³ Resource concerns can include soil health and erosion, water quality and quantity, emissions, forage for livestock, energy efficiency, invasive pests and other environmental factors that affect a farm.⁴ Farmers and landholders can apply for multiple EQIP contracts, but if they wish to incorporate comprehensive conservation across their entire operation, they are encouraged to graduate from EQIP to the Conservation Stewardship Program (CSP). The average EQIP contract size in FY23 was $7,852.⁵

Who is getting the money?

Nationwide, 10 EQIP practices averaged over $50,000 per contract. Many of these practices only make sense for large-scale farms, leaving less EQIP money for lower cost practices with greater conservation impact. Over $182 million was spent on these 10 practices in FY23 alone, or about 11% of the total. While some of these practices have environmental benefits, others, such as waste storage facility, waste facility cover and anaerobic digester, have questionable environmental benefits and bolster the polluting concentrated animal feeding operation (CAFO) system of the largest livestock operations. 

How expensive are digesters really?

Anaerobic digesters, otherwise known as methane digesters or, simply, digesters, are installed on operations with large amounts of liquid animal manure to “digest” methane emissions into other products, such as biogas and manure digestate. EQIP digester contracts are awarded almost solely to massive CAFOs. They make sense, according to the U.S. Environmental Protection Agency (EPA), for operations with at least 500 cows or 2,000 hogs,⁶ which applies to fewer than 4% of farms with cattle⁷ and fewer than 14% of farms with hogs.⁸

A recent study found that dairy operations that installed digesters grew their herd sizes by 3.7% each year, or 24 times the growth rate of dairies without digesters.⁹ Methane emissions from livestock do not come from manure alone, but also from the animals themselves. According to the Intergovernmental Panel on Climate Change, less than 10% of the methane emissions from cattle come from manure storage, with the rest coming from enteric fermentation, or the process of digesting food (the infamous “cow burps and farts”).¹⁰ Storage of pig manure makes up the majority of methane emissions associated with the animal.¹¹ With increases in herd sizes, the methane reduction benefits of digesters shrink dramatically. As the U.S. pursues its methane reduction strategy, we cannot afford to waste billions of dollars on false climate solutions, such as digesters that encourage herd growth. 

Compare digesters with silvopasture — another livestock-focused practice that helps farmers and ranchers integrate livestock and trees. While a silvopasture-based operation has only a fraction of the herd that a confinement-based operation does, the farmer can still make ends meet. Not only can planting and managing trees in pastureland capture and store carbon, but the trees can also provide additional nutrition for livestock in the form of fruits and nuts.¹² Additionally, silvopasture can bolster wildlife habitat, improve biodiversity and provide needed cooling for livestock on hot summer days. Silvopasture can be the backbone of a sustainable livestock operation, and at an average contract cost of $8,894, is a bargain compared to digesters. Nationwide in FY23, 97 silvopasture EQIP contracts were awarded at a total cost of $862,743, just slightly over the cost of two digesters. 

Moonlight in Vermont

In Fiscal Year 2023, Vermont awarded 1,434 EQIP contracts. Of those contracts, two were for anaerobic digesters. Those two digesters were awarded a combined $840,722, or 5.5% of the state’s total of over $15 million. In the same year, nearly 66% of applicants for EQIP, or 584 applications, in Vermont were turned away. The money that went to those two digesters could have instead been used to help 264 farmers implement a conservation crop rotation, a practice that can conserve soil, build resilience, reduce fertilizer use and diversify income for farmers. Or, it could have helped 583 farmers try conservation cover,¹³ a practice that can restore high-erosion cropland to native grassland that, by NRCS’ own rankings, has the same positive effect on greenhouse gas emissions as digesters. 

Funding contrasts in Michigan 

In FY23, Michigan awarded four pond sealing or lining concrete contracts for $1,088,066, an average of $272,016 per contract. While we do not know the specifics of each contract, we know that the contracts awarded in Michigan were more expensive than the national average for this contract by nearly $100,000, suggesting they likely went to larger livestock operations. 

Michigan has a diverse agricultural sector, including row crop commodities, fruit and vegetable production, robust urban agriculture and forestry. This diversity of crops and animals raised means more resilience for the state’s economy and is often highlighted by leaders in the state, including Senate Agriculture Committee Chair Debbie Stabenow.¹⁴ With the money used to fund four pond sealing contracts, 76 high tunnels could have been funded, helping small-scale producers extend their growing season and providing local food sources in urban areas such as Detroit where high tunnels enable farmers to grow large amounts of food on small plots of land. 

Which EQIP practices are the most expensive? 

While conservation is not always cheap, there is a difference between spending resources on true conservation versus more industrial practices that lock in harmful ways of growing crops and raising livestock. Table 1 below shows the top 10 EQIP practices by average contract size in Fiscal Year 2023. Many of these practices benefit large-scale operations and subsidize agricultural systems that run counter to conserving resources. Among these practices are anaerobic digesters, waste facility cover and waste storage facilities.

The average cost of EQIP contracts for five anaerobic digesters funded in FY23 was over $400,000. Digesters can cost much more than this: According to the University of California – Davis, digesters for dairy cattle cost about $1,190 per milking cow.¹⁵ For an operation with 2,000 milking cows, the total cost of a digester is roughly $2.38 million. Digesters are also eligible for funding from the Rural Energy from America Program, a taxpayer-funded program that helps farmers finance and install energy production on their land, with a focus on renewable energy.¹⁶

Another expensive practice at a contract level is pond sealing or lining concrete. This practice, which used an average of just above $175,000 in EQIP dollars in FY23, can be used with waste storage facilities and other liquid manure management practices to prevent manure seepage into groundwater.¹⁷ While this practice can have other uses for drinking water for pastured livestock, NRCS does not separate and share data on whether a practice is used for waste management, drinking water for livestock or another use. 

Because FY23 was the first year EQIP included funding from the IRA, we indicated which practices are eligible for IRA money with an asterisk in the tables below. We were unable to access data that separates IRA-specific funding from general Farm Bill funding, so we could not analyze how much of this new climate funding is going to true conservation versus practices we determine to be industrial in nature. 

Table 1: Top 10 EQIP Practices by Average Contract Size, Fiscal Year 2023

Practices with asterisks* are listed on the FY 2024 Climate Smart Agriculture and Forestry List by NRCS, thereby
eligible for IRA contracts.

Another way to look at EQIP contract expense is by the total dollar amount spent per practice (see Table 2). While some industrial practices show up again on this list, such as waste storage facility and waste facility cover, there are also many true conservation practices included. Cover crops are by far the most popular EQIP practice nationwide and help thousands of farmers improve soil health, prevent erosion, and provide additional income and feed sources. Over $142 million was spent on cover crop contracts in FY23. 

Nearly $60 million was spent on high tunnels in FY23, otherwise known as “hoop houses.” High tunnels can help farmers extend their growing seasons and are popular among small-scale producers and vegetable growers, among others.¹⁸ High tunnels can be a climate adaptation tool for farmers, helping them insure against threats such as early frosts and heavy rainfalls while also building local food security and sovereignty.

As in FY22, many irrigation practices are present on this list. While not all irrigation practices are inherently destructive, some practices intended to conserve water for farmers in dry areas can lead to increased water use.¹⁹ In an era of drying aquifers and less consistent rainfall, conservation programs should go toward true water saving measures. If we incentivize practices such as large-scale drip irrigation that might use less water per crop acre (“more crop per drop”) but expand an operation and thus its water usage, the environmental benefit will diminish. 

Table 2: Top 10 EQIP Practices by Dollar Amount Spent, Fiscal Year 2023

Practices with asterisks* are listed on the FY 2024 Climate Smart Agriculture and Forestry List by NRCS, thereby eligible for IRA contracts.

Which EQIP Practices are most popular?

Another important way to consider EQIP awards nationwide is by the number of contracts awarded. This can be shorthand for the number of farmers served by different practices. Some of the clearest differences between Table 3 and the previous tables are that the most popular practices are relatively inexpensive. Of the top 10 most popular practices, not one averages over $10,000 per contract. For a small grazer, a $3,000 prescribed grazing contract can be life changing, helping reduce feed costs or improve pasture health. For a small-scale row crop farmer, a cover crop contract can be the gateway to implementing conservation across their whole farm, creating what could become a soil health multiplier effect. Even a simple practice, such as pasture and hayland planting, could lead to higher quality, more digestible hay for livestock, requiring less digestion and leading to less emissions from enteric fermentation. 

Table 3: Top 10 EQIP Practices by Number of Contracts Awarded, Fiscal Year 2023

Practices with asterisks* are listed on the FY 2024 Climate Smart Agriculture and Forestry List by NRCS, thereby eligible for IRA contracts.

What does NRCS consider climate smart? 

According to NRCS, “climate-smart agriculture and forestry is an integrated approach that enables farmers, ranchers, and forest landowners to respond to climate change by reducing or removing greenhouse gas emissions (mitigation) and adapting and building resilience (adaptation), while sustainably increasing agricultural productivity and incomes.”²⁰ Since the IRA was enacted as law, NRCS updates the list of agricultural practices it considers to be climate smart each year. The practices and enhancements on this list are eligible for the $8.45 billion in EQIP dollars set aside by the IRA for climate-smart agriculture. 

Below is a list of practices eligible for EQIP funding, compared with NRCS’s ranking of each practice’s effects on greenhouse gas emission (GHG) reduction. The bolded practices have been identified as “climate smart” by NRCS, making them eligible for IRA funding. NRCS uses a scale from negative five to five, with five providing “substantial improvement” and negative five providing “substantial worsening.”²¹ NRCS uses this type of ranking for resource concerns other than GHG reduction, including soil erosion, air quality and water. Despite the larger matrix NRCS uses, this GHG ranking list, in particular, informs the agency’s decisions on which practices should be eligible for IRA dollars. 

How NRCS ranks the physical effects of each EQIP practice on greenhouse gas emissions (GHGs)²²

Bolded practices are included on the FY24 Climate Smart Agriculture and Forestry list.

*Used for compost bedded-pack

**Used for biogas capture

***Used specifically to “restore floodplain hydrology”

****Used for energy use reduction

*****Specifically used for alternated wetting and drying in rice production

NRCS places a high value on quantifying climate improvements. By its own admission, the numbers used in its CPPE matrix are not rigorous or strictly scientifically based, but rather a helpful way to inform NRCS policies. Interestingly, anaerobic digesters and feed management are tied for the highest ranking of all practices on the list, receiving the same ranking as practices such as tree/shrub establishment and soil carbon amendment. Additionally, NRCS has not shared the scientific basis for adding digesters to the climate smart list. A recent Freedom of Information Act (FOIA) request from Earthjustice to NRCS on the scientific basis of adding digesters showed that only four studies were used, two of which are roughly 20 years old and not peer reviewed.²³ One of the more recent studies used highlighted the ammonium nitrogen present in digestate, the waste product created by the process of anaerobic digestion,²⁴ with the fourth focused on proper venting of digesters for worker safety. The continued presence of digesters on the climate smart list without proper scientific evidence showing climate benefits will continue to shut out more deserving farmers and practices. It would continue a trend of public dollars bolstering the false climate solution of methane digestion and biogas production also seen through California’s Low Carbon Fuel Standard.²⁵

Some practices on the climate smart list do not rank highly on the CPPE matrix. While one can assume that a waste storage facility for compost bed and pack (the only waste storage facilities eligible for IRA funding) would have better climate benefits than traditional waste storage facilities, both are combined into one practice, making it hard to differentiate the two. Additionally, in analyzing contract data, the public does not know how many contracts within that practice go toward composting compared to the liquid manure storage typically funded. 

It’s not just carbon dioxide and methane

A notable practice that is not included in the list of climate-smart practices is organic management. This practice assists producers in improving soil health and reducing greenhouse gas emissions by reducing the use of chemical fertilizers and pesticides.²⁶ The production and application of chemical fertilizers is a major known source of nitrous oxide (N2O), which is 265 more potent a climate heater than carbon dioxide and lasts 121 years in the atmosphere.²⁷

If we are serious about tackling climate change through our agricultural systems, we need to invest more in ways of producing food and fiber that emit less, including organic agriculture. We also need to tackle all climate heating gases, not focus solely on carbon dioxide or methane. This is the mandate set out by the text of the Inflation Reduction Act and is something NRCS should fully pursue. 

U.S. nitrous oxide emissions by source

Policy solutions

• Remove expensive practices mostly used for CAFOs from the Climate Smart Agriculture and Forestry list
• Lower the EQIP payment limit from $450,000 to $150,000 so more farmers can access the program
• Train NRCS staff in outreach to small-scale producers and the practices such producers use
• Ensure NRCS staff are paid well and disincentivize high turnover in other ways. In 2022, of the 1,500 NRCS positions eligible for direct hire, only 800 hires were made, and only 500 were retained²⁹
• Create a more transparent process for determining climate smart practices through a public comment process or some other means
• Incorporate IRA funding into EQIP baseline to ensure stable funding years beyond the IRA’s cutoff of 2031
• Ensure CSP is well-funded and EQIP producers can graduate to CSP to promote whole-farm conservation
• Create waste storage facility for composting as an additional practice and remove practice 313 from the Climate Smart list

Conclusion

EQIP remains a popular program throughout the U.S. FY23 saw an increase of over 2,000 applications from FY22, and additional funding from the IRA was able to connect more farmers with funding than in previous years. This is good news! Additionally, most IRA funding is going to good practices that help farmers build soil health and steward their lands more sustainably.  

Despite the hard work of the NRCS staff and the conservation community to publicize climate-focused farming practices, available funding still barely scratches the surface of demand. With reforms, existing funding for EQIP can go much farther in helping farmers implement the practices they need to build climate and economic resilience. 

More farmers involved in conservation means more positive neighbor-to-neighbor chats about the benefits experienced, the income saved and the crops planted despite heavy rains. It means more birdsong, more monarch butterflies and more biodiversity in the face of a wildlife crisis. It can mean more demand for local, small-scale mills, butchers, equipment dealers and more vibrant main streets, or a step closer to true agroecology in the U.S. It could simply mean a farmer tries something new or experiences a little stress relief and the satisfaction of looking out the window and not seeing that bothersome gully anymore. 

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Endnotes

1.  National Sustainable Agriculture Coalition. Inflation Reduction Act of 2022: A deep dive on an historic investment in climate and conservation agriculture. Accessed March 19, 2024. https://sustainableagriculture.net/blog/inflation-reduction-act-of-2022-a-deep-dive-on-an-historic-investment-in-climate-and-conservation-agriculture/.
2.  Karen Hansen-Kuhn. Institute for Agriculture and Trade Policy. First steps toward an agroecological transition in U.S. agricultural policy. Accessed March 20, 2024.
3.  National Sustainable Agriculture Coalition. Environmental quality incentives program. Accessed March 14, 2024. https://sustainableagriculture.net/publications/grassrootsguide/conservation-environment/environmental-quality-incentives-program/.
4.  Natural Resources Conservation Service. Natural Resource Concerns. Accessed March 14, 2024. https://www.nrcs.usda.gov/conservation-basics/natural-resource-concerns.
5.  Natural Resources Conservation Service. FY 23 EQIP Apps Contracts Practice Oblig 11 16 2023. Accessed via data request to NRCS staff. 
6.  Environmental Protection Agency. Is anaerobic right for your farm? Accessed March 15, 2024. https://www.epa.gov/agstar/anaerobic-digestion-right-your-farm.  
7.  National Agricultural Statistics Service. Cattle and calves herd size by inventory and sales: 2022. Accessed March 15, 2024. https://www.nass.usda.gov/Publications/AgCensus/2022/Full_Report/Volume_1,_Chapter_1_US/st99_1_013_014.pdf.
8.  National Agricultural Statistics Service. Hogs and pigs herd size by inventory and sales: 2022. Accessed March 15, 2024. https://www.nass.usda.gov/Publications/AgCensus/2022/Full_Report/Volume_1,_Chapter_1_US/st99_1_020_023.pdf.
9.  Friends of the Earth, Socially Responsible Agriculture Project. Biogas or bull****? The deceptive promise of manure biogas as a methane solution. Accessed March 14, 2024. https://foe.org/resources/biogas-or-bull/#:~:text=Our%20report%20offers%20new%20evidence,to%20the%20Global%20Methane%20Pledge.
10.  United Nations Environment Programme. Global Methane Assessment: Benefits and costs of mitigating methane emissions. Accessed March 18, 2024. https://www.unep.org/resources/report/global-methane-assessment-benefits-and-costs-mitigating-methane-emissions.
11. Ibid.
12.  United States Forest Service. Silvopasture. Accessed March 14, 2024. https://www.fs.usda.gov/nac/practices/silvopasture.php#:~:text=Silvopasture%20is%20the%20deliberate%20integration,and%20long%2Dterm%20income%20sources.
13.  Natural Resources Conservation Service. Conservation cover (ac.) (327) conservation practice standard. Accessed March 18, 2024. https://www.nrcs.usda.gov/resources/guides-and-instructions/conservation-cover-ac-327-conservation-practice-standard.
14.  Senator Debbie Stabenow. Supporting Michigan’s agricultural economy. Accessed March 19, 2024. https://www.stabenow.senate.gov/about/issues/supporting-michigans-agricultural-economy.
15.  Aaron David Smith, University of California – Davis. The value of methane from cow manure. Accessed March 18, 2024. https://asmith.ucdavis.edu/news/digester-update.
16.  United States Department of Agriculture Rural Development. Rural Energy for America Program renewable energy systems & energy efficiency improvement guaranteed loans & grants. Accessed March 18, 2024. https://www.rd.usda.gov/programs-services/energy-programs/rural-energy-america-program-renewable-energy-systems-energy-efficiency-improvement-guaranteed-loans.
17.  Natural Resources Conservation Service. Conservation practice standard overview: pond sealing or lining-concrete (code 522). Accessed March 18, 2024. https://www.nrcs.usda.gov/sites/default/files/2022-09/Pond_Sealing-Liner-Concrete-522-Overview-May-2016.pdf.
18.  Natural Resources Conservation Service. High tunnel initiative. Accessed March 18, 2024. https://www.nrcs.usda.gov/programs-initiatives/eqip-high-tunnel-initiative.
19.  Michael Happ, Institute for Agriculture and Trade Policy. Waste and water woes. Accessed March 18, 2024. https://www.iatp.org/waste-and-water-woes.
20.  Natural Resources Conservation Service. Climate-smart agriculture and forestry 2023 fact sheet. Accessed March 14, 2024. https://www.nrcs.usda.gov/sites/default/files/2023-04/Climate-Smart%20Agriculture%20and%20Forestry%20factsheet.pdf.
21.  Natural Resources Conservation Service. Conservation practice recommendations & effects. Accessed March 14, 2024. https://www.nrcs.usda.gov/resources/guides-and-instructions/conservation-practice-physical-effects.
22.  Natural Resources Conservation Service. Conservation practice physical effects (CPPE) – FY24 National template. Accessed March 14, 2024. https://www.nrcs.usda.gov/resources/guides-and-instructions/conservation-practice-physical-effects.
23.  John H. Martin. 2003. A comparison of dairy cattle manure management with and without anaerobic digestion and biogas utilization. https://citeseerx.ist.psu.edu/document?repid=rep1&type=pdf&doi=160df2ee… also: John H. Martin. 2005. An evaluation of mesophilic, modified plug flow anaerobic digester for dairy cattle manure. 
24.  Xiaoquian Zhang et al. Long-term performance of three mesophilic anaerobic digesters to convert animal and agro-industrial wastes into organic fertilizer. Journal of Cleaner Production. Volume 307. July 20, 2021.  https://www.sciencedirect.com/science/article/pii/S0959652621014906.
25.  Ben Lilliston. Institute for Agriculture and Trade Policy. IATP comment to the California Air Resources Board on the Low Carbon Fuel Standard. Accessed March 19, 2024. https://www.iatp.org/documents/iatp-comment-california-air-resources-board-low-carbon-fuel-standard.
26.  Natural Resources Conservation Service. Conservation practice standard: organic management: code 823. Accessed March 14, 2024. https://conservationwebinars.net/webinars/organic-agriculture-as-a-climate-change-mitigation-and-adaptation-strategy/823_VT_ICPS_Organic_Management_2022.pdf/at_download/file.
27.  Environmental Protection Agency. Overview of greenhouse gases: Nitrous oxide. Accessed March 15, 2024. https://www.epa.gov/ghgemissions/overview-greenhouse-gases#nitrous-oxide.
28.  Ibid.
29.  David Frabotta. Trust in Food. NRCS Chief Terry Cosby details funding for ‘once-in-a-lifetime investment into conservation.’ Accessed March 19, 2024. https://www.trustinfood.com/2023/02/06/inflation-reduction-act-almost-doubles-nrcs-budget-to-supplement-existing-farm-bill-programs/.