1. Mark Xu NRCS 67th Annual SWCS International Conference

2. NRCS Payment Schedules What is a payment schedule? A collection of payment rates used to reimburse estimated costs incurred by program participants for the installation of conservation practices using conservation programs such as EQIP, WHIP, AMA, AWEP, and CBWI. State-set payment schedules: 2008-2012 Centralization of payment schedules: FY2012: 15 priority practices FY2013: 154 practices

3. Well Developed Conservation Costs as Major Elements of NRCS Payment Schedules

4. Organization of Conservation Cost Development for FY2013 Payment Schedules 1 National Core Team 9 National Technical Specialist Teams 15 Regional Scenario Teams 1 National Cost Team Leadership & Process Mgt Component Prices Regional Scenarios Components & National Scenarios

5. Practices, Scenarios, and Components Practices --- 154 conservation practices, give or take a few, defined by NRCS conservation practice standards. Scenarios --- each practice can be implemented differently by scenario, depending on the geographic area where it applies, the typical resource setting in which it is used, and the natural resource concerns to be addressed Components --- building blocks of scenarios, unique products or services necessary for implementing conservation practice scenarios.

6. Development of National Scenarios Principles for national scenario development Each national scenario should meet the criteria in the conservation practice standard Each national scenario should be based on the least-cost principle Each national scenario should usually be nationally applicable and may not include some of the regionally specific scenarios. Outputs for national scenario development National scenarios for all 154 practices have been developed, some of them are still been finalized. National tech teams also sets maximum number of scenario limit by practice.

7. Development of Components How components are produced? Scenario building involves determining how many of what components are needed. The process of developing national scenarios also necessarily produce a list of components to be used by the scenarios. Component by practice table for each practice from national technical teams sent to national cost team for review and synthesis, filtering redundancy and inconsistency among components from different practices. National technical teams uses components completed by cost team to finalize national scenarios. Over 1,200 unique components were developed.

8. Development of Component Prices Accomplishments: over 60,000 price data points developed (1,200 components x 51 states) Principles Reliability and credibility Consistency Efficiency

9. Principle #1: Reliability and Credibility For compiled data, data sources must be credible. Data compilation follows sound method. For market data, large national vender are preferred over small local venders. Data description must match the definition of the component exactly. if not, then some adjustments are needed. Data needs to be recent enough. Within 1 year is our goal

10. Principle #2: Consistency For the same component, data sources and calculations of average state prices have to be the same or very similar for all states. Data sources for similar components need to be the same or very similar. For the same component, data sources needs to be relatively stable and consistent by year.

11. Principle # 3: Efficiency When multiple methods meeting the same reliability, credibility and consistency requirements, price data should be collected with the least amount of time and effort. As such, we gave higher priority to data sources that have state average data already developed. Indexes may be used to estimate state prices from national averages or single state prices, instead of collecting price data by state for the same component if such data does not already exist or can be easily calculated from other sources.

12. Procedure for Developing Component Prices Develop prices by component type Data source evaluation and documentation Estimate component prices by indexes if prices for all states are not directly available. Adjust all prices to a certain month of a year, January 2012, for example.

13. Develop Prices by Component Type 21 component types By characteristics and data sources Lead to: Efficient use of existing expertise in the team. Developed expertise for future price development Avoided redundancy Matching with price indexes Component ID Component TypeCost Category 1ChemicalsMaterials 2ConcreteMaterials 3EarthworkMaterials 4EquipmentEquipment/Installation 5FenceMaterials 6FertilizersMaterials 7Irrigation SystemMaterials 8Labor 9MetalMaterials 10Mobilization 11Training Acquisition of Technical Knowledge 12PipelineMaterials 13Plastic/CompositeMaterials 14PumpMaterials 15SeedMaterials 16TankMaterials 17WoodMaterials 18TestingMaterials 19EnergyMaterials 20Waste HandingMaterials 21OtherMaterials

14. Data Source Evaluation

15. Data Source Classification Nationally published public and private data sources: DOL Wage Rates by Occupation National commercial databases: RSMeans National vendors: Fencing materials, seedling and chemical suppliers State/local vendors and other data sources Past state payment schedule cost data

16. State Price Development Three situations Prices for all states are the same --- all states use the same national average price for the component. Prices differ by state and all state prices are available --- enter all state prices. Prices differ by state and all state prices are NOT available --- need to estimate missing state prices. Estimation method: price indexing RSMeans city Indexes: Concrete, Earthwork. Custom Indexes. Example: Fertilizer

17. RSMeans City Indexes RSMeans City Indexes cover 20 sectors, 400+ US cities, and are differentiated by Material, Installation, and Total Cost. State Indexes for the same sectors are developed by averaging RSMeans City Indexes within each state for cities with population less than 50,000. Sector IDSector CodeSector Name 115433Contractor Equipment 20241, 31 - 34Site & Infrastructure, Demolition 3310Concrete Forming & Accessories 4320Concrete Reinforcing 5330Cast-In-Place Concrete 603Concrete 704Masonry 805Metals 906Wood, Plastics & Composites 1007Thermal & Moisture Protection 1108Openings 120920Plaster & Gypsum Board 130950, 0980Ceilings & Acoustic Treatment 140960Flooring 150970, 0990Wall Finishes & Painting/Coating 1609Finishes 17COVERSDivs. 10 - 14, 25, 28, 41, 43, 44 1821, 22, 23Fire Suppression, Plumbing & HVAC 1926, 27, 3370Electrical, Communications & Util. 20MF2004Weighted Average

18. Formulas for State Price Estimation From National average price: Average price of the component for state i = National average price of the component * Price index for state i / National average price index From a state price: Average price of the component for i state= Average price of the component for state j * Price index for state i / Price index for state j

19. Adjust all component prices to January 2012 Each component is labeled with the month and year of its price data. Using the NASS Prices Paid Index, we adjusted all prices to August 2011 by matching component types and PPI types. Formula: Component TypeIndex to use HerbicidesNASS Herbicides Total Index for Prices Paid, 1990 - 1992 InsecticidesNASS Insecticides Total Index for Prices Paid, 1990 - 1992 ConcreteNASS Construction Total Index for Prices Paid, 1990 - 1992 EarthworkNASS Construction Total Index for Prices Paid, 1990 - 1992 EquipmentNASS Machinery Total Index for Prices Paid, 1990 - 1992 FenceNASS Construction Total Index for Prices Paid, 1990 - 1992 N FertilizerNASS Nitrogen Total Index for Prices Paid, 1990 - 1992 P&K Fertilizer NASS Potash and Phosphate Total Index for Prices Paid, 1990 - 1992 Irrigation SystemNASS Machinery Total Index for Prices Paid, 1990 - 1992 LaborNASS Labor Total Index for Prices Paid, 1990 - 1992 MetalNASS Construction Total Index for Prices Paid, 1990 - 1992 OtherNASS Ag Services Total Index for Prices Paid, 1990 - 1992 PipelineNASS Construction Total Index for Prices Paid, 1990 - 1992 Plastic/CompositeNASS Construction Total Index for Prices Paid, 1990 - 1992 PumpNASS Machinery Total Index for Prices Paid, 1990 - 1992 SeedNASS Seed and Plants Total Index for Prices Paid, 1990 - 1992 TankNASS Construction Total Index for Prices Paid, 1990 - 1992 WoodNASS Construction Total Index for Prices Paid, 1990 - 1992 Component price in August 2011= Component price at time t * Matching NASS PPI in August 2011 / Matching NASS PPI at time t

20. Development of Regional Scenarios Inputs National scenarios Components by practice list Component prices by practice by State Maximum number of scenario by practice Process Accept a national scenario as it is Modify a national scenario Develop a brand new scenario Additional principle: typical regional scenario Status: still in development, will complete by the end of September, 2012

21. Outputs for the NCCD A component list: over 1,200 A component price by state list: over 60,000 A scenario cost list by region, completed with detailed scenario definitions, sizes, components used, along with component prices and quantities.

22. Future Potential Development Data need difference Payment schedules: state average prices for typical regional scenarios Conservation planning and evaluation: state or local prices for individual scenarios Potential future developments Augment NCCD with atypical scenarios and local component price data Incorporate NCCD in a data distribution system to make it easily accessible and customizable