ERS recently constructed a new set of regions depicting geographic specialization in production of U.S. farm commodities. ERS will use the new regions to display results of its analyses in a broad array of venues from briefings to publications, our web site, and journal articles. This pamphlet introduces the new ERS Farm Resource Regions, explains their origin and rationale, and serves as a reference for our clients.

While the 1999 drought has had severe financial impacts on agricultural producers in the drought regions, its impact on U.S. agricultural production has been limited. The drought will reduce commodity receipts relative to 1998 by an estimated $1.29 billion. Estimated farm net income losses, including expected yield losses, increases in expenses, and insurance indemnities, will total $1.35 billion, about 3 percent of expected 1999 U.S. net farm income. Drought impacts in areas of the Northeast designated as extreme and severe drought are expected to reduce farmers' net income by nearly $840 million. The regions affected, the crops grown in those regions, the increased use of irrigation, and crop insurance coverage limited the drought's impacts on agriculture nationally. Drought also affects the rural population by reducing water supplies available for human and livestock consumption.

While the 1999 drought has had severe financial impacts on agricultural producers in the drought regions, its impact on U.S. agricultural production has been limited. The drought will reduce commodity receipts relative to 1998 by an estimated $1.29 billion. Estimated farm net income losses, including expected yield losses, increases in expenses, and insurance indemnities, will total $1.35 billion, about 3 percent of expected 1999 U.S. net farm income. Drought impacts in areas of the Northeast designated as extreme and severe drought are expected to reduce farmers' net income by nearly $840 million. The regions affected, the crops grown in those regions, the increased use of irrigation, and crop insurance coverage limited the drought's impacts on agriculture nationally. Drought also affects the rural population by reducing water supplies available for human and livestock consumption.

The range of environmental problems confronting agriculture has expanded in recent years. As the largest program designed to mitigate the negative environmental effects of agriculture, the Conservation Reserve Program (CRP) has broadened its initial focus on reductions in soil erosion to consider other landscape factors that may also be beneficial. For example, preserving habitats can help protect wildlife, thus leading to more nature-viewing opportunities. This report demonstrates how nonmarket valuation models can be used in targeting conservation programs such as the CRP. Acknowledgments

Ralph Heimlich is Geographic Information Systems Coordinator with USDA 's Economic Research Service. C. Tim Osborn is leader of the Resource and Commodity Policy Section of USDA 's Economic Research Service. Views expressed in this paper are the authors ' own and do not necessarily represent the views of the United States Department of Agriculture or the Economic Research Service. What will happen to the Conservation Reserve Program (CRP) in a few short years when contracts end? This question will be an important part of the 1995 farm bill debate. CRP provides important environmental benefits and is a significant component of some farm incomes. However, policy makers must decide what role remains for long-term land retirement programs in view of the budget deficit.

Farmer participation in a proposed 5,600 cow central digester facility is a function of herd size, present manure handling system, income tax effects and expectations about future changes in contract terms. The present value of net benefits from participation ranges from $6,000 to $6,400 for large herds and $3,200 for medium herds with manure storage. No net benefits accrue to medium sized herds not currently storing manure. Environmental impacts of the proposal will likely be positive for air and water quality but could reduce soil quality unless organic matter is returned to cropland.

Economic and environmental analyses of manure handling systems have implications for programs to regulate agricultural nonpoint sources of water pollution and programs to subsidize manure handling practices. Previous economic analyses in the literature are discussed. Manure systems are evaluated in a consistent framework to determine construction and operating costs. The effect of soil type on nutrient conservation is examined for two hypothetical farms. Dissolved phosphorous runoff is estimated for the farms varying storage capacity and soil type. Costs of phosphorus reduction by handling system, housing type and soil type are examined. Conclusions for cost-sharing policy are drawn.