Hemp has long been pitched to Kentucky farmers as a way to diversify their income. Research now suggests it could diversify the landscape itself, with measurable benefits for the state's water and wildlife.
Tyler Mark, Ph.D., an agricultural economist in the University of Kentucky Martin-Gatton College of Agriculture, Food and Environment (CAFE), co-authored the paper published in Applied Economic Perspectives and Policy alongside researchers at Mississippi State University and Central State University.
The study examined what happens to Kentucky's environment when hemp constitutes a larger share of the state's farmland. The team found that more hemp means more crop diversity, which is linked to cleaner water and a wider variety of birds.
Kentucky is one of the nation's leading hemp-producing states. According to the USDA 2026 National Hemp Report, Kentucky farmers planted 4,800 acres of industrial hemp in 2025. Now, much of the conversation around the crop has centered on markets and prices, particularly as growers in a state with deep tobacco roots look for new options. The researchers wanted to look at a less-discussed side of the equation.
"Profitability, while important, is only part of the story," Mark said. "Hemp can also impact the environment. If hemp acres are going to expand, then we also need to understand and quantify these impacts."
Landscapes planted with diverse crops tend to offer more varied habitat for wildlife and can reduce the nutrient runoff that degrades streams and lakes. When a new crop like hemp enters rotations alongside corn, soybeans, hay and tobacco, it adds to that mix.
To measure the effect, the researchers took a two-prong approach using county-level data from across the Commonwealth.
First, they ran a series of simulations in which hemp planting increased from 1% to 10% of Kentucky's total agricultural land. In every scenario, crop diversity rose steadily as hemp acreage expanded. Next, the researchers used statistical models that follow counties over time to estimate how changes in crop diversity relate to environmental conditions.
Second, to assess water quality, the authors looked at water clarity, dissolved oxygen and phosphorus levels. For wildlife, they looked at bird diversity, a common indicator of overall habitat health. Economists call these "non-market" benefits. No one is directly paid for them, but everyone downstream benefits.
By linking the two steps, the team could estimate how much a hemp-driven bump in crop diversity would shift those environmental measures.
There's a catch, though. The study found the ecological payoff depends on scale. A handful of small hemp plots scattered across the state may help individual farmers' bottom lines without making much of a difference for water or wildlife. The broader benefits occur only when hemp, and the biological diversity it brings, reaches a large enough share of the landscape.
That finding carries implications for policy. Programs aimed at small-scale farmers tend to focus on helping them turn a profit, which the authors note is a worthy goal on its own. But if policymakers also want hemp to deliver environmental returns, the researchers say practical, proactive measures will be needed to bring more smallholders into hemp production so their combined acreage adds up to real change on the land.
"Hemp has the potential to be another crop Kentucky producers can add to their crop rotation once regulatory clarity allows the market to mature," Mark said. "This would give Kentucky producers another crop, one with benefits beyond profitability."
Learn more about the Department of Agricultural Economics at Martin-Gatton CAFE at https://agecon.mgcafe.uky.edu/.
This material is based upon work that is supported by the National Institute of Food and Agriculture, U.S. Department of Agriculture, under award number 2021-69012-35918. Any opinions, findings, conclusions or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the view of the U.S. Department of Agriculture.
