Iowa lawmakers are still trying to find a way to protect environmental resources, especially when it comes to our state’s water. Unfortunately, the policies they’re considering are very similar to ones that contribute to our environmental problems: government spending.
Among the competing proposals in the statehouse to address water purification efforts this year, lawmakers have proposed diverting $464 million from existing infrastructure funds, extending a portion of the state sales tax to the tune of $4.7 billion, and even increasing sales taxes. In addition to that spending, a state task force recently recommended that the government offer low-interest loans or grants for farm improvements designed to clean up our water. The ultimate goal would be to reduce the nitrate levels in water across the state.
But we’re already spending a fortune on conservation efforts, with state conservation spending hitting an all-time high of $221 million in 2015. Despite all this spending, our water crisis continues.
To those who think more money will solve our water issues, consider the effect government spending has already had on farming, where it usually does more to harm water quality as it alters key agricultural market signals.
A recent study from Iowa State University found that taxpayer-subsidized crop insurance has blurred the line between profitable and unprofitable farmlands. From 2010 to 2015, the areas of unprofitable farmland have expanded, and today 27 percent of Iowa’s row crop acres operate at a loss. Overall, around 6.2 million acres of Iowa farmland are estimated to have lost $100 or more per acre last year.
Agricultural producers continue working on unprofitable lands because crop insurance ensures their profitability even on low yielding acres. The insurance creates a distorted incentive by eliminating risk at the expense of taxpayers.
Take a look at some common farm practices. Tiling farmland to manage moisture levels throughout a field is an effective way to increase crop production, but when pushed too far, this same practice creates runoff that affects our water. While farmers operating under a system of pure profit and loss would have to weigh the cost of farming new land, government agricultural subsidies give them less incentive to be cautious about the financial and environmental drawbacks.
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One of those subsidies, albeit indirect, is the Renewable Fuel Standard. This federal regulation requires that our gasoline be mixed with a certain percentage of ethanol, a corn byproduct. The result? Unsurprisingly, farmers have increased production to meet higher demand as any business owner would. As recently as 2014, 38 percent of corn production was for ethanol use.
Increased demand lead to increased production and new acres being farmed. To find these new acres, some farmers have even begun to eliminate buffer strips between their farms and waterways and Iowa has seen a loss of natural wetlands. As a result, we have more runoff and environmental degradation.
Iowa has reaped short-term benefits from agricultural incentives and subsidies, but what are the unintended consequences? Iowa’s water quality may be just that; an unintended consequence of the chain reaction that occurs when the government spends taxpayer money to manipulate agricultural markets. Throwing dollars into our water certainly won’t protect it in the long-run, but clearing out counterproductive incentives will.
• Drew Klein is the Iowa state director of Americans for Prosperity.