L1D78 (1.4) |
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L1T76 (40%): farmers (4%), agricultural (4%), nitrogen (3%), farms (3%), farm (3%) L1T4 (5%): reduction (9%), reductions (5%) L1T63 (4%): costs (21%) L1T91 (3%): under (9%), net (6%), yields (5%), yield (4%) |
title | abstract |
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OUTPUT AND INPUT SUBSIDY POLICY OPTIONS IN BANGLADESH (1991) 🗎🗎 | Recent changes in pricing policies emphasizing price supports and phasing out fertilizer subsidies are a step in the right direction, particularly if minimizing the combined foreign exchange and budgetary expenditures of Bangladesh and donor nations is the key objective. A normalized restricted profit function is used to estimate profit and factor demand functions from farm-level, cross-sectional data for the food grain and jute crops in Bangladesh. The estimated elasticities are used to evaluate price support and fertilizer subsidy programs in terms of their costs to the government, foreign exchange effects, and producer surplus for the food grain and jute sectors. |
VALUING THE MULTIDIMENSIONAL IMPACTS OF ENVIRONMENTAL-POLICY - THEORY AND METHODS (1991) 🗎🗎 | A theoretically consistent framework is developed for valuing the multidimensional impacts of environmental policy. Conventional benefit estimates are shown to be biased because of the presence of substitution and complementarily effects in valuing policy impacts. Procedures are developed for implementing a valid framework. Consistent with theory, empirical results indicate significant substitution effects in valuing environmental conditions across different geographic regions. |
INTERACTIONS BETWEEN AGRICULTURAL AND RESOURCE POLICY - THE IMPORTANCE OF ATTITUDES TOWARD RISK (1991) 🗎🗎 | Using a method proposed by Meyer for deriving comparative statics results in the presence of risk, this paper analyzes the effects of various agricultural and environmental policy alternatives on the choices of a risk-averse producer with a Just and Pope production function. Many commonly held beliefs about policy effects are not supported unambiguously by economic theory. For example, a tax on pesticides will not necessarily reduce pesticide use or average output, and a reduction in price of agricultural output will not necessarily lead to a reduction in use of water or agricultural chemicals. |
Pesticides enhance agricultural productivity, but the environmental and health side effects of their use justify government regulation, a subject of continuing societal debate. Bans on pesticide use are the principal regulatory device used in the United States. The economic impacts of such bans depend on the availability of substitutes, supply and trade conditions, and research and development. Without substitutes, pesticide bans result in reduced production levels and higher prices, a substantial loss of discretionary income to consumers, and a redistribution of income among agricultural producers. Most food safety concerns can be addressed by establishing standards and markets for pesticide-differentiated products, but worker safety and clean water concerns will require direct controls. Pesticide-use fees are shown to be more efficient than outright pesticide bans as a mechanism to obtain environmental goals. | |
DYNAMICS OF STRUCTURAL-CHANGE IN THE ONTARIO HOG INDUSTRY (1992) 🗎🗎 | Farm size distribution dynamics for hog production in Ontario are analyzed, using stationary and nonstationary transition probability models. Both models predict that there will be approximately 60 % fewer hog producers in Ontario by the turn of the century than at the beginning of 1990. The three exogenous variables used in the nonstationary models - hog/corn price ratio, interest rate and labor/capital price ratio - are shown to have some effect on the transition dynamics, although the major effect appears to be from a combination of technological advancements and improvements in human capital. The effect of the exogenous policy variables on the probability of transition to a given size is generally limited to the interaction between the inactive farmers and the smallest classes. Poor prices tend to increase the exodus of farmers from the industry, with most of those leaving being smaller producers. |
DO INCREASED COMMODITY PRICES LEAD TO MORE-OR-LESS SOIL DEGRADATION (1992) 🗎🗎 | In this paper, a dynamic economic model is used to analyze the conflicting impacts of crop increasing/land degrading inputs with those of soil conserving/crop reducing inputs in problems of soil degradation in agriculture. Soil is a renewable resource that is generated naturally at a slow, essentially autonomous rate. Cultivation enhances crop production and degrades the soil, while conservation is unproductive for the crop but improves the soil resource. If the effects of cultivation dominate the effects of conservation in the soil dynamics, an increase in the price of the crop accelerates the rate of soil degradation in the short-run and decreases the long-run stock of the soil resource. On the other hand, if the effects of conservation dominate the effects of cultivation, an increase in the price of the crop decelerates the rate of soil degradation in the short run and increases the long-run stock of the soil resource. It is shown that subsidies on conservation activities or taxes on cultivation intensity may well decrease the long-run soil stock, although strong conditions must be satisfied for either of these results to hold. It also is shown that a reduction in the real discount rate or a direct per unit tax on soil losses is certain to increase the long-run soil stock and reduce the short-run rate of soil degradation. |
REGIONAL ENVIRONMENTAL AND INCOME EFFECTS OF REGULATORY LEVIES ON NITRATE SURPLUSES OF DAIRY HOLDINGS (1993) 🗎🗎 | In the Netherlands, dairying is characterized by an excessive use of nitrogen. Nitrogen inputs invariably exceed nitrogen outputs, the remainder being lost into the environment through ammonia emission, nitrate leaching and runoff, denitrification and accumulation. Regularatory levies on nitrogen surpluses (the difference between all inputs and outputs at the farm expressed in kilograms of nitrogen per hectare) reduces the basis of cost-benefit analyses of various alternatives as a change of conduct is realized in which marginal costs equal marginal benefits. In this study, the goal was to determine the amount of the levy required to reduce in various areas in the Netherlands the environmental damage caused by nitrogen, and to calculate the income effects for farmers. Regional differences arise from the different soil types and water-table classes. There is a strong correlation between the input of fertilizer per hectare and the number of cows per hectare, with the nitrogen surpluses produced above a threshold level of 200 kg ha-1 of grassland being liable to tax. It is found that a US$ 1.70 levy with a levy threshold greatly affects the reduction of the nitrogen surplus. This levy causes the nitrogen surplus average in the four regions to fall by about 100 kg N ha-1 and nitrogen application rates by about 150 kg N ha-1. However, in some regions with sandy soils and low ground-water levels, this levy is insufficient to attain the nitrate objective. The loss of earnings relative to the autonomous situation in the year 2000 will average $143 ha-1. The policy recommendations are to examine more closely whether minerals accounting is a foolproof system before employing it as a regulatory instrument. Generic policies will not cause equal reduction of environmental damage because of the differences of soils and ground-water levels. Differentation between regions is an alternative option. |
THE IMPACT OF POLLUTION CONTROLS ON LIVESTOCK-CROP PRODUCERS (1993) 🗎🗎 | A discrete-time, continuous-space model of a livestock-crop producer is used to examine the long-run effects of phosphorus runoff controls on optimal livestock production and manure application practices. Quantity restrictions and taxes,on phosphorus application are shown to reduce livestock supply and impose greater costs on livestock-crop producers than on crop-only producers. Restrictions on manure application, without accompanying restrictions on commercial fertilizer application, will have only a limited effect on phosphorus runoff levels. |
ECONOMIC-ANALYSES OF MEASURES TO CONTROL PHOSPHORUS RUN-OFF FROM NONPOINT AGRICULTURAL SOURCES (1993) 🗎🗎 | Economic analyses have been made of nine measures against phosphorus run-off from non-point agricultural sources. The farm economic analyses cover the effects of the control measures on profitability, whereas the socio-economic analyses examine the cost-effectiveness of reducing algae-accessible phosphorus. In both types of analysis the uncertainty is quantified by Monte Carlo simulation. Planned fertilising and a tax on phosphorus are recommended as steps to be taken nationwide. Measures against the spreading of manure outside the growing season and against autumn tilling are recommended for areas where excessive fertilising with phosphorus is a problem. |
ESTIMATING THE COSTS OF ENVIRONMENTAL-PROTECTION IN BRAZIL (1994) 🗎🗎 | In this paper an effort is made to estimate the amounts of money the government of the state of Sao Paulo, Brazil, must transfer to countries in which environmentally protected areas of any sort have been established by the state. A methodology to estimate these transfers is proposed, based on the potential loss of production in the protected areas, and the corresponding amounts are calculated. The results indicate that protecting 7.68% of the state's territory will cause a maximum decrease in its GDP of 0.05%. The estimation of monetary values for environmental costs is of interest because it provides a basis for judgement among different environmental protection alternatives and between these and other investment projects. |
BENEFITS OF IMPROVED WATER-QUALITY - A DISCRETE-CHOICE ANALYSIS OF FRESH-WATER RECREATIONAL DEMANDS (1994) 🗎🗎 | Discrete choice methodologies are increasingly being used to estimate multiple-sites recreational demands and evaluate the welfare effects of alternative environmental policies aimed at cater quality improvements. In this study the authors use 1985 data on Indiana anglers to estimate a multinomial legit model of destination choice and compute the benefits of alternative water quality improvements. In general, the results indicate that anglers are reasonably sensitive to changes in water quality. The per-trip welfare gains from a 1% reduction in various pollutants range from 4.9 to 25.3 cents and a similar reduction in all pollutants increases per-trip welfare by 64.5 cents. |
THE SUSTAINABILITY OF INDONESIA UPLAND CONSERVATION PROJECTS (1994) 🗎🗎 | The Upland Agricultural and Conservation Project in Central and East Java is representative of Indonesia's upland conservation efforts. An important component of the project was the use of subsidies to promote activities which increased farmer incomes and soil conservation. Two types of subsidies were used: an operating subsidy for annual inputs such as seed, fertiliser and pesticides; and a capital subsidy for terracing and related construction. This study measures the extent to which the effects of the subsidies were sustained over varying periods following termination of the project. The results show that the effects of the operating subsidies are clearly not sustainable; the effects of the capital subsidies may persist longer, but they too are probably not sustainable. |
ANALYSIS OF FUTURE CHANGE IN DUTCH ARABLE FARMING - A FARM ECONOMICS APPROACH (1994) 🗎🗎 | In the present article a model system is presented to analyse agricultural change at farm and regional level. The core of the system is a linear programming (LP) model of the individual farm which includes an environmental component of the input and discharge of nitrogen and pesticides. Modules representing feedback within and between family farms were added to the LP model. Application is presented for scenario analysis of future arable farming in a specific region of the Netherlands. |
IMPACTS OF TAXES TO REDUCE AGRICHEMICAL USE WHEN FARM POLICY IS ENDOGENOUS (1994) 🗎🗎 | The economic impacts of policies to reduce water pollution from agriculture have been explored in a number of studies. A standard assumption in this literature is that farm income support policies are given. However, the modern public choice view of agricultural policy suggests that significant environmental initiatives in agriculture would likely be accompanied by changes in farm income policies to protect those with a significant stake in agriculture. We explore the potential effects of such compensating adjustments on the costs and effectiveness of taxes on polluting chemical inputs in US corn production. We find that compensating farm policy adjustments can greatly increase the costs and reduce the effectiveness of the environmental protection measure. The results also indicate the potentially high costs of poor policy co-ordination. |
ROLE OF VOLUNTARY PROGRAMS IN AGRICULTURAL NONPOINT POLLUTION POLICY (1994) 🗎🗎 | Voluntary programs' effectiveness in reducing agricultural pollution is under debate in the professional literature, within government regulatory agencies, and among legislators. In general, non-farm business owners bear little or none of the costs of environmental degradation that their business activities cause. However, farmers who reside on the farm may bear some of the costs associated with using chemicals. As a result, voluntary programs encouraging adoption of management practices that simultaneously improve on-farm and off-farm environmental quality may not require subsidizing farmers for their full loss in profits. However, farmers likely will not adopt regulatory agencies' recommended management practices that do not positively affect on-farm environmental quality unless subsidies exceed full adoption costs. |
FARM-LEVEL ECONOMIC-ANALYSIS INCORPORATING STOCHASTIC ENVIRONMENTAL RISK ASSESSMENT (1995) 🗎🗎 | A farm-level risk programming framework is presented which evaluates income/environmental risk tradeoffs. This framework uses a time-series of environmental risk indices to incorporate the stochastic, multiattribute characteristics of environmental outcomes associated with agricultural production practices. The model is applied to a representative farm in the Oklahoma Panhandle region of the Central High Plains. Results indicate that expected income is sensitive to nitrate loading restrictions, and relatively less sensitive to pesticide loading restrictions. Results also indicate that prescriptions derived using deterministic environmental risk measures may ignore significant probabilities of exceeding an environmental standard. |
An empirical analysis of the relative efficiency of policy instruments to reduce nitrate water pollution in the US southern high plains (1995) 🗎🗎 | This paper develops a modeling framework for evaluating alternative water quality protection policies. The framework integrates the EPIC-PST crop growth/chemical transport model and a mathematical programming model. The framework is applied to the evaluation of four water quality policies in the southern high plains of the United States: restrictions on per-acre nitrogen use, taxes on nitrogen use, taxes on irrigation water use, and incentives to convert conventional irrigation systems to modern irrigation technology. The results indicate that producers would make a variety of adjustments in responding to these policies. Important responses might include reductions in nitrogen and water use, crop substitution, removal of land from crop production and conversion from irrigated to dryland production. These four policies are evaluated based on changes in farm income and social welfare. The irrigation system conversion incentive clearly outperforms other policies from both society's and producers' points of view. Producers would prefer nitrogen use restrictions to nitrogen or water use tares because farm income would be reduced less under the restrictions than under the taxes. Nitrogen use tares, however, are more desirable than nitrogen use restrictions from society's point of view. |
TRADE AND TAX POLICY REFORM AND THE ENVIRONMENT - THE ECONOMICS OF SOIL-EROSION IN DEVELOPING-COUNTRIES (1995) 🗎🗎 | The widespread view that trade reform is bad for the environment has rarely been subjected to close scrutiny. In a developing country model we trace general equilibrium impacts of tax and tariff policy changes on upland resource allocation and, by implication, on the rate of erosion. Our analysis highlights the role of domestic market linkages as conduits between lowland and upland economies. When economywide effects are taken into account, indirect policies such as tariff reforms may in some cases provide better means for reducing upland erosion than would direct environmental policies. |
SOIL CONSERVATION AND GOVERNMENTAL POLICIES IN TROPICAL AREAS - DOES AID WORSEN THE INCENTIVES FOR ARRESTING EROSION (1995) 🗎🗎 | This paper focuses on how farmers respond with respect to the adoption of soil conservation measures to governmental agricultural policies aiming at supporting smallholders. A simple micro-economic framework was chosen to undertake an analysis of farmer choices among three activities; farming, adoption of soil conservation measures and off-farm work. The model shows that governments have to be cautious when designing support measures if improved resource management is a policy goal. In the design of such measures, attention has to be paid both to (1) the distribution in land quality, and (2) the distribution in the net returns from adopting soil conservation measures. |
TECHNOLOGY ADOPTION DECISIONS UNDER IRREVERSIBILITY AND UNCERTAINTY - AN EX ANTE APPPROACH (1995) 🗎🗎 | Empirical results demonstrate that uncertainty about costs and requirements for environmental compliance is an important determinant of dairy producers' investment behavior. Ex ante forecasting of how uncertainty and irreversibility are likely to affect producers' responsiveness to agricultural technologies has implications for the design of environmental policies. Simulation modeling methods are described. The empirical analysis focuses on Texas producers' propensity to adopt free-stall dairy housing. Free-stall investments offer advantages for both productivity-augmentation and pollution abatement, yet uncertainty and irreversibility are obstacles to adoption. Implications of this ex ante paradigm for policy design and implementation are discussed. |
REGULATION OF NITROGEN POLLUTION - TAXES VERSUS QUOTAS (1995) 🗎🗎 | This paper investigates the effects of first-best policies to regulate nitrogen application. Some nitrogen fertilizer is applied ex ante before a random rainfall, but sidedressed nitrogen may be applied ex post. First-best policy is a tax or a quota on ex ante application, because sidedressed nitrogen is not leached. Since a risk-averse farmer uses more nitrogen ex ante than a risk-neutral farmer, a higher tax must be imposed on the former. Action equivalent first-best taxes and quotas are also welfare equivalent. An empirical model for wheat in Israel was used to demonstrate the analytical findings. |
SENSITIVITY OF FARM PLANS UNDER RISK-AVERSE BEHAVIOR - A NOTE ON THE ENVIRONMENTAL IMPLICATIONS (1995) 🗎🗎 | This study demonstrates that the intensity of farm-level land use can be extremely sensitive to minor reductions in expected farm income when the risk-averse farmer makes utility maximising decisions. The study uses directly elicited utility functions for farmers in the North of England in conjunction with MOTAD generated E,V frontiers. The results imply that instability encourages the use of less intensive fanning methods and therefore could actually assist the achievement of environmental policy goals. |
VALUING THE BENEFITS OF THE SOUTH DOWNS ENVIRONMENTALLY SENSITIVE AREA (1995) 🗎🗎 | Over the last few decades increasing concern has been voiced regarding the detrimental effect which many modern farming practices are thought to have on the countryside. The Environmentally Sensitive Areas (ESA) Scheme is one response to this concern and seeks to support those agricultural practices which have contributed to the distinctive agricultural landscape, which for many people typifies the British countryside. This paper uses the contingent valuation method to estimate the benefits which the general public receives from the ESA scheme in the South Downs and sets them against the estimated net exchequer costs of the scheme. The study illustrates the importance of including passive use values in benefit-cost analysis, if environmental protection is to be provided in certain marginal areas. |
FARM HOUSEHOLD MODELING FOR ESTIMATING THE EFFECTIVENESS OF PRICE INSTRUMENTS IN LAND-USE POLICY (1995) 🗎🗎 | A farm household modelling approach using linear programming is presented that integrates biophysical and socio-economic information for simulating micro-level responses to specific changes in the socio-economic environment. The linear programming model includes separate modules for prices, production activities and expenditures from which the objective function is derived. Moreover, the model comprises a production structure adjustment coefficient to account for incomplete specification of the objectives of the farmer in the objective function. The model was calibrated for one specific farm type in the Atlantic Zone of Costa Rica, a peasant household, and applied to calculate effects of several price instruments. The results, in terms of response multipliers, give an indication of the pace and direction of land use change at the micro-level as a result of(induced) change in the socio-economic environment. |
A POLICY SIMULATION OF THE WETLANDS RESERVE PROGRAM (1995) 🗎🗎 | Farmer participation in wetlands restoration practices is explained using land benefits, land attributes, and owner attributes. The probability of participation is estimated using county-level data, and used to calculate the expected acreage restored. National restored wetlands reserves are simulated by sorting counties on government cost and enrolling acreage into the reserve until the acreage target is reached. Total government cost for a million-acre reserve ranges from $1736 million to $1869 million, depending on the administrative strategy used. Using estimated participation rates in place of hypothetical rates suggests that achieving acreage targets may be more expensive than previously thought. (C) 1995 Academic Press, Inc. |
TECHNOLOGY AS AN AGRICULTURAL POLLUTION-CONTROL POLICY (1995) 🗎🗎 | In this paper we consider the market-level impacts of factor-augmenting innovations designed to reduce the use of fertilizers and pesticides, first within the context of a simple two-factor model, and then through a simulation model of the U.S. corn market. In both models, the impacts depend on the output demand elasticity and input substitution elasticities. The principal conclusion of the simulation analysis is that the potential for new techniques to reduce the use of agricultural chemicals is limited. Capital-augmenting innovations would actually raise fertilizer and pesticide usage. Land-augmenting innovations would also tend to increase pesticide usage. |
REGULATING NONPOINT-SOURCE POLLUTION UNDER HETEROGENEOUS CONDITIONS (1995) 🗎🗎 | Because of difficulties in measuring effluent from nonpoint pollution, proposals for regulating agricultural runoff often suggest instruments applied to inputs or management practices. When pollution functions vary across sources, uniform input instruments cannot achieve a least-cost pollution reduction, but efficient instruments may be difficult to administer. In this paper we analyze lettuce production on two soils in California's Salinas Valley to consider empirical costs associated with uniform input taxes and regulations. The results suggest that uniform instruments may not be costly relative to an efficient baseline. Though taxes are more efficient, farmers have higher profits with regulations. |
THE ECONOMIC CONSEQUENCES OF REDUCED FERTILIZER USE - A VIRTUAL PRICING APPROACH (1995) 🗎🗎 | The virtual pricing approach is applied to perform an ex ante analysis of reduced chemical use on agricultural output, input demand and profitability. Aggregate data on Indiana agriculture spanning the 1950-86 period are used to estimate parameters of a normalized quadratic profit function using Bayesian techniques. Empirical results on the response of substitute and complementary inputs to a 15% and a 30% fertilizer restriction are obtained and the ad valorem taxes required to accomplish such restriction are calculated. |
THE POTENTIAL IMPACT OF ENVIRONMENTAL CROSS-COMPLIANCE ON ARABLE FARMING (1995) 🗎🗎 | It is argued that the ongoing CAP/GATT reforms provide a basis for the introduction of environmental cross-compliance (ECC). ECC enables policymakers to restrict output-related direct support payments to those farmers who comply with specified environmental guidelines aimed at reducing the external damage effects of agricultural production. This paper is an exploratory investigation of ECC and presents the results of a farm-level linear programming analysis of 15 North-West England arable farms. The environmental guidelines, which relate to permanent as opposed to rotational set-aside and to levels of fertiliser use, are widely applicable to the extent that ECC can be implemented as a voluntary policy system. They are clearly effective in achieving policy goals since all but one of the farmers investigated would comply with the full range of restrictions considered. Within this range, gross margins are reduced by up to 10 per cent while area and output of seed crops are reduced by around 22 per cent and 12 per cent respectively. Row crops area and output are more robust, each falling by just under 4 per cent. |
FARM HOUSEHOLD RESPONSES TO GOVERNMENT POLICIES - EVIDENCE FROM WEST JAVA (1995) 🗎🗎 | Few micro level analyses have been undertaken in Indonesia of rural households' responses to government policies, and of household characteristics and endowments. Most studies of rural household behaviour in Indonesia have analysed the consumption, production and labour supply aspects separately, ignoring the complex interrelations among farm production, farm profit, household consumption and family labour supply. In this study, the complex nature of rural household production and consumption decisions is analysed by applying a farm household model to cross-sectional data from 241 households in six villages of West Java. The model incorporates multiple crops, different wage levels for males and females, and non-agricultural employment. |
ECONOMIC AND ENVIRONMENTAL IMPLICATIONS OF SOIL-NITROGEN TESTING - A SWITCHING-REGRESSION ANALYSIS (1995) 🗎🗎 | A simultaneous equations, or ''switching-regression,'' model is developed to assess the impact of soil nitrogen (N) testing on N fertilizer use, crop yields, and net returns in corn growing areas of Nebraska, The results indicate that when there is uncertainty about the quantity of available ''carry-over'' N, N testing enables farmers to reduce fertilizer use without affecting crop yields. However, the value of information from N tests depends critically on cropping history and soil characteristics. These findings have implications for environmental and technology transfer policies designed to reduce nonpoint source water pollution. |
Optimal design of a voluntary green payment program under asymmetric information (1995) 🗎🗎 | Green payment programs, where the government pays farmers directly for environmental benefits, are an alternative to the current method of achieving environmental benefits which restricts farming practices in exchange for deficiency payments. This article presents a voluntary green payment program using the principles of mechanism design under asymmetric information. Information asymmetry arises because the government knows only the distribution of farmers' production situations, rather than farm-specific information. The program is demonstrated with irrigated corn production in the Oklahoma high plains. A green payment program can reduce budget costs and pollution, while increasing the net social value of corn production. |
Scenarios of technical and institutional change in Dutch dairy farming (1996) 🗎🗎 | Scenario analysis is used in this paper to assess consistent sets of future circumstances in Dutch dairy farming. The fields of interest are technical and institutional change. Technical change includes improvement in fodder and milk production. Institutional change includes changes of environmental policy and of market and price policy. All key factors are historically analyzed and forecasts are made for 2005 and are bundled into four scenarios. The scenarios are governed by environmental policy and common agricultural policy. For environmental policy a moderate and a severe variant are distinguished, and for common agricultural policy a price support and a two-price variant. |
Measuring the marginal cost of nonuniform environmental regulations (1996) 🗎🗎 | A method is presented for measuring the marginal welfare cost of environmental regulations affecting agriculture. The method incorporates output market effects and recognizes diversity in production conditions among crops, regions, and seasons. An important advantage of the method is that only regional outputs and changes in regional production costs are needed to calculate deadweight loss, thus simplifying the measurement of welfare changes. This feature of the model is significant since the complexity and substantial data requirements of most existing impact models cause many environmental regulations to be enacted with inadequate analysis of their economic impacts. The method also disaggregates welfare impacts by crop, place, and time. thus encouraging the implementation of nonuniform interventions that achieve a given level of environmental quality more efficiently than uniform policies. |
Environmental and agricultural policy effects on information acquisition and input choice (1996) 🗎🗎 | A dynamic model of the farm is developed to evaluate the effects of agricultural policies, a unit pesticide tax, and an information subsidy on the choice of damage control inputs. Non-chemical damage control inputs are information based and require investment by the farmer in information. The steady state comparative statics show that a pesticide tax can provide an incentive for the adoption of a non-chemical pest control input and that conventional economic intuition about the effects of farm program parameters depends crucially on the returns to scale of the non-chemical kill function and the local stability of the steady state. (C) 1996 Academic Press, Inc. |
Incentive payments to encourage farmer adoption of water quality protection practices (1996) 🗎🗎 | Farmers can be encouraged to voluntarily adopt environmentally sound management practices through the use of incentive payments, This paper uses both a bivariate probit with sample selection model and a double hurdle model on data from a survey of farmers to predict farmer adoption of the practices as a function of the payment offer. The five management practices addressed here are integrated pest management, legume crediting, manure testing, split applications of nitrogen and soil moisture testing. Also estimated are models that predict the acreage on which these practices would be applied given the decision to accept the incentive payments estimated. |
The Nutrient Flow Model for Dutch agriculture: A tool for environmental policy evaluation (1996) 🗎🗎 | The Nutrient Flow Model (NFM) is a micro-simulation model. It describes economic activities and corresponding nutrient flows at farm level for present and future situations in which environmental policy measures are taken. The farm results are aggregated to regional and national levels. The model can be used as an instrument for monitoring and policy evaluation. Technical aspects are incorporated into the model by means of crop growth models and nutrient balances for animals. Economic aspects are partly incorporated and partly added exogenously. The information need for the NFM is rather extensive. Main data sources are the Dutch Agricultural Census and the Dutch Farm Account Data Network. The model tries to combine the detailed approach with respect to production activities and nutrient flows that is often found in models at farm level with the more global approach that is followed in economic models on sector level. The variation in emissions between farms is dealt with explicitly. This paper presents the general concept of the NFM. It shows that the validation of technical models used in the NFM, on the basis of empirical data, is essential from the point of view of nutrient losses. An example is given of the assessment of the effects of government policies: the obligatory injection of manure may lead to a decrease in ammonia volatilisation but, at the same time, to an increase in nitrate leaching. The integrated approach of dealing with different nutrients simultaneously, taking into account all inputs and outputs, describing the complete chain of nutrient flows within farms, and modelling the interaction between farms makes the NFM a suitable instrument for the evaluation of environmental policy. (C) 1996 Academic Press Limited |
European environmental regulations to reduce water pollution: An analysis of their impact on UK dairy farms (1996) 🗎🗎 | This study simulates the impact of environmental regulations on a group of dairy producers in the UK, The regulations originate from the EU and the Netherlands, and are designed to reduce water pollution from livestock waste. Policy simulation is carried out using Lineal Programming models and an environmental sub-model allowing policy to be assessed in both economic and environmental terms, In many cases, policy imposition has no effect, and hence the distribution of waste across farmland and the targeting of pollution policy are considered. |
Regulating nonpoint-source pollution from agriculture: An integrated modelling analysis (1997) 🗎🗎 | This paper analyses a set of policy measures oriented towards reducing losses of nitrogen, phosphorus, and soil from agricultural land. An interdisciplinary modelling system - ECECMOD - is presented and a set of policy scenarios analysed. The analyses are oriented towards comparing the effects of input-oriented measures (fertiliser taxes) and policy measures directed towards more direct changes in the agronomic practices conducted on the farm. The effects on emission levels, abatement costs, and distributional effects are documented. The trade-offs between precision and regulation costs are discussed. |
Dynamic optimization of nitrogen use when groundwater contamination is internalized at the standard in the long run (1997) 🗎🗎 | An economic relationship between agricultural production and groundwater pollution is established first by analyzing the problem in a dynamic setting. Using experimental data from 1987 to 1990 from three sites, optimal policy rules that would maintain the nitrate contamination level at the 10 mg/l standard over time are determined next. Nitrogen application rates are then determined based on the optimal policy rule and available residual nitrogen in the root-zone layer. It is shown that in the first year one of the sites should be fertilized at a lower-than-profit-maximizing rate while the other two sites should not be fertilized at all. |
Co-operative dairying in Maharashtra - Lessons to be learned (1997) 🗎🗎 | Through milk production in Maharashtra over last decade has increased by leaps and bounds, only 25 per cent of the milk co-operatives are economically viable in the state. Differential price structure and mismanagement of co-operatives has led to poor procurement of milk resulting in vast regional imbalances in terms of milk production. For the smooth functioning of the milk co-operatives, it is not enough to give remunerative prices to the producers, but the co-operatives themselves should take over the onerous task of ensuring necessary inputs so as to improve productivity and overall genetic stock of milch animals. |
Economic instruments and environmental policy in agriculture (1998) 🗎🗎 | Economic instruments can achieve environmental goals at least cost and provide incentives for further improvements. There are limited opportunities for the use of such instruments in agriculture where the pollution problems can be traced as in the case of intensive livestock operations. However, most environmental problems in agriculture involve a large number of diffuse pollution sources whose abatement practices are unobservable rendering it difficult to achieve cost-effective pollution control with any single instrument. Rather than relying on first-best solutions through economic instruments, the most effective way of dealing with diffuse-source pollution problems in agriculture may be technological developments and business-led initiatives. |
This paper estimates the costs of abating agricultural nitrogen pollution in wetlands. By linking costs for construction of wetlands to the denitrification capacity of wetlands, an abatement cost function can be formed. A construction-cost function and a denitrification function for wetlands is estimated empirically. This paper establishes a link between abatement costs and the nitrogen load on wetlands. Since abatement costs fluctuate with nitrogen load, ignoring this link results in incorrect estimates of abatement costs. The results demonstrate that wetlands have the capacity to provide low cost abatement of nitrogen compounds in runoff. For the Kattegatt region in Sweden, marginal abatement costs for wetlands are shown to be lower than costs of land use changing measures, such as extended land under fallow or cultivation of fuel woods, but higher than the marginal costs of reducing nitrogen fertilizer. (C) 1998 Elsevier Science B.V. All rights reserved. | |
Technology, market policies and institutional reform for sustainable land use in southern Mali (1998) 🗎🗎 | To identify appropriate interventions that support sustainable land use, a farm household modelling approach is applied to analyze micro-economic supply reactions to various policy measures. The modelling framework links agro-technical and economic data, and takes both production and consumption decisions into account, allowing land use and production technology adjustments in accordance with farm household objectives. Different types of farm households are distinguished on the basis of their resource endowments, savings coefficients and time discount rate. Actual and alternative (sustainable) cropping and livestock activities for different weather regimes are defined for southern Mali. The effects on sustainable land use and expected farm household welfare of adopting alternative technologies and modifying prices, transaction costs, access to credit and land taxes are demonstrated. Even with full information on sustainable technologies, strong policy interventions are required to halt soil degradation. Structural policies proved to be more effective than price policies to reduce soil degradation while maintaining positive income effects. When prices are determined endogenously, structural policy loses some effectiveness as an incentive for sustainable land use due to the effect of additional supply on local cereal and meat prices. (C) 1998 Elsevier Science B.V. All rights reserved. |
Crop price and risk effects on farm abatement costs (1998) 🗎🗎 | Potential leaching losses of nitrogen depend in large part on the craps grown. Since crop selection is a major means of abatement for nitrates in groundwater, it follows that the compliance costs to producers for reducing excess nitrogen is influenced by crop prices. This paper demonstrates the role that crop prices play in determining the level of on-farm abatement casts and even the necessity for regulatory policies to deal with the nitrate problem. Government support programs, specifically the Gross Revenue Insurance Program (GRIP), have increased the relative support for corn, which has higher leachate potential than other crops, and thereby requires increased abatement effort. The required level of abatement is less when risk aversion is considered than under risk neutrality, since. the variability in returns among rotations is related to the degree of emissions generated. Changes in the mean and variance of relative output prices can significantly alter the optimal crop mix, leachate potential and on-farm abatement efforts. Subsequently, there is an effect on abatement costs associated with alternative environmental control instruments, which in turn affects policy design through issues such as political feasibility and equity considerations. |
Agricultural liberalization in the European Union: An analysis of the implications for nature conservation (1998) 🗎🗎 | The liberalization of agricultural policy is a more realistic prospect today than ever before. Following the Uruguay Round Agriculture Agreement of 1993. European policymakers are committed, at least at the level of rhetoric, to the further progressive decoupling of agricultural support in order to increase the exposure of Europe's farmers to world markets. There are compelling reasons to believe that, by the turn of the century, policymakers will come under mounting pressure to further liberalize the CAP. The environmental implications of this policy shift are profound. According to some commentators, the rural environment stands to benefit from a double dividend: once when the reduction in prices brings about an extensification of production, and again when resources previously committed to price support are reinvested in agri-environmental schemes. This paper considers the validity of this important idea. It examines the assumptions behind the extensification effect and discusses the willingness and ability of policy-makers to plough substantial sums of public money into fully decoupled agri-environmental programmes. The paper suggests that the first round effects of a withdrawal of support may not be unambiguously good for the European countryside, while the 'green recoupling' of support could prove more complicated politically than is often assumed. (C) 1998 Elsevier Science Ltd. All rights reserved. |
A note on imperfect monitoring of agri-environmental policy (1998) 🗎🗎 | In this note the impact of imperfect compliance monitoring on the implementation of agri-environmental policy is analysed. A principal-agent model vis used to demonstrate how imperfections in the monitoring process lead to a higher levels of incentive payments to ensure compliance. This means that less accurate compliance monitoring results in social costs from policy implementation. Technical enhancements in the accuracy of compliance monitoring will therefore lead to a reduction in social costs. This is an important result with significant implications for the design and implementation of agri-environmental policy. |
The effect of rental rates on the extension of conservation reserve program contracts (1998) 🗎🗎 | Given that the majority of conservation reserve program (CRP) contracts on approximately 36 million acres of enrolled land expire concurrently, re-enrollment decisions by farmers and the federal government have high budgetary implications. Using a survey of over 8,000 CRP contract holders, we apply an ordered response discrete choice model to explicitly model the range in rental rates over which the representative farmer may be ambivalent to renewing the CRP contract. Given the empirical results from the ordered response model, we estimate acreage re-enrollment as a function of the rental rate and compare them to results of a binomial choice model. |
Analysis of environmental policy measures aimed at reducing nitrogen leaching at the farm level (1998) 🗎🗎 | Environmental policy measures aimed at reducing nitrogen leaching from the root zone are analysed using farm-level models representing typical Danish crop farms and livestock holdings, the objective being to indicate the cost-effectiveness of the measures compared to a baseline scenario (1995). The cost-effectiveness of the measures is expressed as costs (i.e. changes in producers surplus) per kg reduction in N leaching, and the reductions in nitrogen leaching levels from the measures are compared with the official targets of 49% reductions. The modelled effects of levies are presented, and the results indicate that the imposition of levies on commercial nitrogen fertilizer will provide incentives for reduced fertilization and for substitution of commercial nitrogen fertilizer with livestock manure. Levies will also entail the risk of unintended and adverse effects, however, as crop selection can be influenced. These negative effects can be reduced by supplementing levies with a requirement to undersow catch crops in spring-sown cereals and legumes. |
Wastewater reuse - regional and economic considerations (1998) 🗎🗎 | Wastewater treatment and disposal has become a major component of policy-making subject, because of growing awareness of environmental quality issues. Agricultural use of treated effluents helps to maintain environmental quality, and simultaneously furthers other national goals such as providing sustainable agriculture while preserving scarce water sources. Another advantage of irrigation with wastewater is the possibility of decreasing the purification level and the derived treatment costs, thanks to the role of soil and crops in acting as a bio-filter. Also, using the nutrients available in wastewater may diminish fertilization costs. The considerations for policy decision making include many factors such as the level of purification, the location of agriculture and the types of crops. The regional dimension is reflected in the way the decision on where to convey the wastewater influences the choice of agricultural crops, the fate of aquifers and the related costs. For example, in Israel, wastewater treated in the center of the country may pollute the coastal aquifer, whereas conveying this wastewater to the south, where there is no active aquifer gives rise to increased conveyance costs and loss of agriculture in the center. In this paper a general methodology for environmental policy decision making in relation to wastewater is developed and applied in an Israeli case study. (C) 1998 Elsevier Science B.V. All rights reserved. |
Valuing soil conservation benefits of agroforestry: contour hedgerows in the Eastern Visayas, Philippines (1998) 🗎🗎 | Trees can be considered as investments made by economic agents to prevent depreciation of natural assets such as stocks of top soil and water. In agroforestry systems farmers use trees in this manner by deliberately combining them with agricultural crops on the same unit of land. Although advocates of agroforestry have asserted that soil conservation is one of its primary benefits, empirical estimates of these benefits have been lacking due to temporal and spatial complexity of agroforestry systems and the nonmarket aspect of soil capital assets. This study designs and applies a bio-economic framework for valuing the soil conservation benefits of agroforestry. The framework is tested with econometric analysis of data from surveys of households in Eastern Visayas, Philippines, where USAID/Government of Philippines introduced contour hedgerow agroforestry in 1983. By constructing a weighted soil quality index that also incorporates measures of soil fertility, texture and color in addition to erosion, we extend previous economic studies of soil resources. This index is regressed on a variety of farming and site specific bio-physical variables. Next, we use a Cobb-Douglas profit function to directly relate agricultural profits and soil quality. Thus, the value of soil conservation is measured as a quasi-rent differential or the share of producer surplus associated with a change in soil quality. Because this framework assumes the existence of markets, the assumption is tested by analysing the statistical significance of consumption side variables, e.,a., number of household members, on production side variables, e.g., profits. Instrumental variables are used to handle the endogeneity of the soil index in the profit equation. Seemingly unrelated regression (SUR) analysis is used to accommodate correlation of errors across the soil and profit equations. Regression results reveal the importance of agroforestry intensity, private ownership, land fragmentation, and familiarity with soil conservation as positive covariates of soil quality. Analysis of production data indicate the importance of market prices, education, farming experience, farm size, topography, and soil quality as positive covariates of household profits. Investments in agroforestry to improve or maintain soil capital can increased annual agricultural profits by US$53 for the typical household, which is 6% of total income. However, there are significant up-front costs. Given that small farmers in tropical uplands are important players in the management of deteriorating soil and forest resources, policy makers may want to consider supporting farmers in the early years of agroforestry adoption. Published by Elsevier Science B.V. |
Dairy policy in the United States has gone through many changes over the years, but the basic instruments have remained in place for decades. The Federal Agricultural Improvement and Reform (FAIR) Act of 1996 is best seen as a relatively small scale reform of dairy policy. Most of the income transfers from consumers and taxpayers to dairy farms remain intact, and the major economic distortions are unaffected. The major change from phasing out price support program is more one of form rather than substance. Some consider this a fundamental shift in U.S. dairy policy, but its quantitative impact is likely to be minor. Further, because dairy assessments associated with the price support are eliminated immediately, the net transfer from taxpayers to the dairy industry is likely to be higher than it would be if the price support program were left in place. This paper reviews the effects of this change and other dairy policy provisions in the FAIR Act and compares the implications of the new dairy program to implications of three alternatives. continuing the previous program, eliminating marketing orders and the price support program, and eliminating all policy interventions including import barriers. | |
Restricting intensive livestock production: Economic effects of mineral policy in the Netherlands (1998) 🗎🗎 | This paper examines the effects for the Dutch economy of a reduction in livestock production using an applied general equilibrium model. A reduction is seen as a possible solution to the environmental problems linked with the excess supply of minerals to the environment. Results show that a decrease in pig and poultry production to achieve a maximum permitted phosphate loss of 30 kg/ha will decrease income of pig and poultry farming by 2.6 and 1.0 per cent, respectively. The compound feed, pig,neat and poultry meat industry are seriously affected. Trade shows a reduction in,let exports of livestock and meat and net imports of feed stuffs. |
"Maximizing the environmental benefits per dollar expended": An economic interpretation and review of agricultural environmental benefits and costs (1999) 🗎🗎 | The 1996 Farm Bill marked a shift in agricultural environmental legislation toward an economic framework that maximizes the environmental benefits per dollar Expended. This article reviews the valuation literature on agricultural environmental benefits and costs, focusing on both positive (amenity values) and negative (ground and surface water contamination) externalities. External benefits and costs are demonstrated to be large, concurrent, and widely varying by location and affected population. The resulting mosaic of benefits and costs suggests a further need to integrate policy and research if we are to truly adopt an economic orientation in agricultural environmental policy. |
The relative efficiency of voluntary vs mandatory environmental regulations (1999) 🗎🗎 | Increased use of voluntary programs for environmental protection as an alternative to mandatory approaches raises the issue of the relative efficiency of the two approaches. This paper analyzes the efficiency of voluntary programs relative to mandatory programs in agriculture. Under the voluntary program producers adopt a land conservation practice and, in turn, the government provides technical and financial assistance. The voluntary program is more efficient than a program that mandates adoption if and only if the deadweight losses of government expenditures under the voluntary program are less than the difference between private and public costs of government services plus the additional implementation costs of the mandatory program. This necessary and sufficient condition is more likely to be satisfied when (a) the deadweight loss from raising government revenue is zero or small, (b) government services are less rival, (c) the costs of government services are lower than what farmers would have to pay for equivalent private services, (d) the number of farms in the program is large, and (e) the saving in implementation costs under the voluntary program is large and increases rapidly with program acreage. (C) 1999 Academic Press. |
Transaction costs of policies to reduce agricultural phosphorous pollution in the Minnesota River (1999) 🗎🗎 | This study measured the magnitude of transaction costs associated with policies to reduce agricultural nonpoint source pollution. Interviews with staff from governmental agencies were conducted to estimate transaction costs associated with four policies to reduce agricultural phosphorous pollution in the Minnesota River. The tax on phosphate fertilizers had the lowest transaction costs ($0.94 million), followed by educational programs on best management practices ($3.11 million), the requirement for conservation tillage oil all cropped land ($7.85 million), and expansion of a permanent conservation easement program ($9.37 million). Taxes, thus, may have advantages with respect to transaction? costs and abatement costs. (JEL Q15; Q25). |
Farmer risk assessment for voluntary insecticide reduction (1999) 🗎🗎 | We develop a theoretical basis for voluntary reduction in insecticide use, and quantify the subjective value farmers place on reducing environmental risk. The indirect utility model is used to quantify the acceptable financial cost of eliminating one insecticide application in return for avoidance of moderate risk to the environment. The mean valuation in Illinois, Iowa, Nebraska and Ohio, USA, is $8.25 per acre. Acceptable yield loss increases with importance of environmental goods, with formal education and with farming experience. Valuation increases with total expenditure on insecticides up to $89 per acre. Decomposition of the Tobit model used in estimation indicates that voluntary programs should target intensification rather than extensification of participation to maximize effectiveness. (C) 1999 Elsevier Science B.V. All rights reserved. |
Cost-share incentives and best management practices in a pilot water quality program (1999) 🗎🗎 | This study integrates three biophysical simulators to predict crop yields, water-soil pollution emissions, and farmers' net returns under uncertain weather and market conditions. Multiple-objective programming incorporates farmer attitudes toward voluntary participation under alternate rates of government cost-share subsidies to search for efficient pollution abatement solutions as best management practices (BMPs). Net returns decline an estimated 9.6% when farmers adopt a cost-share program with a $2.50/acre subsidy, while reducing N leaching by 2.7%. For a $10/acre subsidy, N leaching can be reduced by almost 6%, but farmer net returns decline by 15%. |
Comprehensive cost-effectiveness analysis of measures to reduce nitrogen emissions in Switzerland (1999) 🗎🗎 | This paper proposes a comprehensive cost-effectiveness analysis to evaluate environmental policies. While effectiveness is measured as the reduction of different pollutants aggregated to a damage index, all the other effects apart from pollutant reduction are monetarised and expressed as cost. The damage index is based on the 'Umwelt-Belastungs-Punkte' (UBP)-method (Environmental Impact Points) and is extended to include the different geographical ranges of various pollutants. The method is then applied to assess the cost-effectiveness of nitrogen reduction measures in Switzerland. The results indicate that a less nitrogen-intensive agricultural production and the use of a new generation of low nitrogen oxide burners are very cost-effective. (C) 1999 Elsevier Science B.V. All rights reserved. |
Modeling the effects of agricultural production. An integrated economic and environmental analysis using farm account statistics and GIS (1999) 🗎🗎 | The spatial distribution of the agricultural farm structure in Vejle County, Denmark, is described by a set of seven farm types distributed on two soil types, using a heuristic spatial allocation procedure in a geographic information system. The effects of agricultural production on the economy and on nitrate leaching are analyzed within an integrated analytical framework based on the spatially distributed farm account data. Regional trends in nitrate leaching caused by the distribution of both soil and farm types are easily identified, and it is argued that a spatially distributed approach is required when analyzing site-specific pollution problems from agriculture. An analysis of the ratio between economic net output and nitrate leaching from different farm types shows a striking feature; as nitrate leaching per ha from different farm types increases, net output per ha increases relatively more, making the average ratio between nitrate leaching and net output smallest for farm types with highest nitrate leaching. This strongly indicates that environmental regulation aiming alone at the farm types with the largest nitrate leaching might not be cost-efficient. (C) 1999 Elsevier Science B.V. All rights reserved. |
The sequencing of agricultural market reforms in Malawi (1999) 🗎🗎 | The paper analyses the welfare impacts of alternative sequencing scenarios of agricultural input and output market reforms in Malawi using a profit maximisation approach. After a review of the literature on the sequencing of agricultural market reforms, the agricultural sector in Malawi is described and its history of market reforms is summarised. Subsequently, a normalised quadratic profit function, with maize and groundnuts as the main competing outputs and fertiliser and labour as the major variable inputs, is estimated. The simulation results using the coefficients of the estimated normalised quadratic profit function show that, contrary to the sequencing path adopted in the 1980s, Malawi's government should have liberalised the maize sector first, followed by the groundnut export sector and once a supply response was generated, input subsidies could have been phased out. This sequence would have minimised the adjustment costs of smallholder farmers and would have reduced the negative impact on maize productivity and food security. |
Publicly-provided information in environmental management: incorporating groundwater quality goals into herbicide treatment recommendations (1999) 🗎🗎 | Use of publicly-provided information to promote environmental quality has received somewhat less attention in the environmental management literature than use of other environmental policy fools based on economic incentives such as emissions taxes, subsidies and marketable permits. Yet publicly-provided information may have potential as an environmental policy tool, especially in managing problems of agricultural pollution, due in large part to the existing capability of public information agencies associated with the agricultural research community Information provided by these agencies is known to be an important factor in decision making in agriculture and may have potential for influencing decisions that relate directly to preserving the integrity of environmental resources. Moreover; this potential may have particular relevance for protecting groundwater qualify from agricultural production since the results of contamination are often at least partially internal to the farm decision maker This paper develops an empirical model to formulate publicly-provided herbicide treatment recommendations designed to protect both the quality of groundwater and the income of farmers. An economic and statistical model of a crop-pest system is used in conjunction with a groundwater loading model to derive the trade-off relationship between producer income and movement of herbicide material through the roof zone. The trade-off relationship can provide the basis for formulating herbicide treatment recommendations and can also shed light on appropriate groundwater quality goals. (C) 1999 Academic Press. |
Controlling agricultural nonpoint water pollution: costs of implementing the Maryland Water Quality Improvement Act of 1998 (2000) 🗎🗎 | The Maryland Water Quality Improvement Act of 1998 (WQIA) seeks to create environmental and other benefits to the Chesapoake Bay through reductions in nonpoint source nutrient pollution. This paper analyzes the economic impacts of the WQIA on agricultural users of nutrients (commercial fertilizers or animal manures) and on poultry growers in the state of Maryland. The net economic impacts to each of these groups are estimated along with some discussion of the distribution of the impacts. Recognition of the distribution of the impacts allows for the assessment of potential policies to address negative impacts. Additional sections of the WQIA are discussed in terms of their ability to shift the distribution of the impacts or to provide partial compensation to those most affected. The WQIA is the most restrictive agricultural nonpoint pollution control law in the US. While the WQIA only regulates nutrient use in the state of Maryland, other states, as well as the federal government. are watching how this law is implemented. Many states are considering similar laws. At the national level, the United States Department of Agriculture and the United States Environmental Protection Agency have issued draft guidelines that will control nutrients from animal operations in much the same way as the WQIA. Therefore, analyses of the economic impacts of the WQIA may be important in shaping policies in other states and at the national level. (C) 2000 Elsevier Science B.V: All rights reserved. JEL classification: Q20. |
The cost of the Kyoto Protocol to US crop production: Measuring crop price, regional acreage, welfare, and input substitution effects (2000) 🗎🗎 | This study analyses the impact of the implementing carbon permit trading, considered under the Kyoto Protocol, and the subsequent expected increase in energy and resource prices on U.S. crop production. The focus is on input substitution, net farm income, regional crop acreage, and crop prices. The analysis is carried out with a calibrated mathematical programming model which covers the major crops produced in the 48 contiguous states on a regional basis. The model accounts for both the variable inputs and the allocatable inputs of land and irrigation water, and it permits input substitution when farmers are faced with external shocks. The results suggest that when energy prices increase, the net cost to the crop-producing sector depends on the farmer's ability to substitute crop inputs and the elasticity of demand for the crops. The impacts of carbon tax cost increases differ significantly among crops and regions. Overall, crop acreage and output decrease, total net revenues increase in most regions, and consumer surplus declines. |
Agricultural comparative advantage and government policy interventions (2000) 🗎🗎 | International trade patterns are often explained by comparative advantage which is frequently thought to depend on variations in national factor endowments. Government intervention in agricultural markets may also have an impact on trade patterns. This study explores the relation between factor endowments and agricultural trade patterns and examines the impact of agricultural and environmental policies on trade flows. Measures of national endowments of capital, labour land and energy reserves are computed for a sample of 40 countries and used to estimate Heckscher-Ohlin-Vanek equations with net trade in several agricultural commodities as the dependent variable Variables measuring agricultural policy and environmental regulations are added to the equations and tested for significance. The variables representing government intervention do not contribute to the explanation of trade patterns while national factor endowments do account for much of the variation in trade patterns of grains, oilseeds, cotton, and to a lesser extent, meat products and an aggregate of all agricultural goods Commodities such as sugar; tropical products and fruits and vegetables do not appear to be well explained by factor endowments. |
Managerial heterogeneity and the compositional effect (2000) 🗎🗎 | Standard microeconomic theory has long recognized firm-level substitution and output effects in explaining aggregate responses to taxation of an input such as nitrogen fertilizer. However, in the presence of managerial heterogeneity, a nitrogen tax will also affect the composition of the industry, with profligate users of nitrogen shrinking in relative importance, and low-nitrogen users expanding. In this paper, we assert that a substantial share of the reduction in nitrogen normally attributed to firm-level substitution may in fact owe its origin to this type of industry-wide compositional effect. We also demonstrate that, while such a tax will have only a minor effect on industry average net returns, its impact on individual corn producers will be quite significant in some cases, with nitrogen-intensive producers losing while those farmers with low rates of commercial nitrogen usage stand to gain from the tax. |
Emissions of greenhouse gases from agriculture: The heterogeneity of abatement costs in France (2000) 🗎🗎 | This paper addresses the assessment of greenhouse gas emissions from agriculture. The analysis focuses on the shadow prices associated with the reductions in the net emissions, taking into account the carbon sequestration by soils and trees. These estimates are based on a set of farm-unit linear programming models representing the French agricultural sector. The distribution of the shadow prices over farm types is discussed and the importance of allowing afforestation on set-aside land to achieve a cost-effective reduction in net emissions is highlighted. However, allowing afforestation on set-aside land may increase inequality in terms of revenue losses for farmers. |
Environmental policies and agricultural land values: Evidence from the Dutch nutrient quota system (2000) 🗎🗎 | The paper analyzes the impact of the phosphate-based animal production rights on agricultural land values in the Netherlands. We claim that the existence of mandatory production control program with regional restriction on trading causes a disproportional increase in land prices in the surplus region where the quota is binding, relative to the deficit region where the quota is not binding, and that the increase in the cost of environmental compliance should generate an eroding effect on the existing gap in land prices. The parameters of an inverse land demand model estimated with panel data support both hypotheses. (Q24). |
Economic and environmental policy analysis of the Flumen-Monegros irrigation system in Huesca, Spain (2000) 🗎🗎 | This article describes a behavioral model of the Flumen-Monegros irrigation area (Spain) and presents the results from the model simulation under various policy scenarios. The model combines agronomic, economic and policy information in a framework built using linear programming and crop growth simulation techniques. An important feature of the model is the classification of crop acreage in various types of soils which have different productive potential. The objective function maximizes net margins of crops and includes direct payments of the Common Agricultural Policy (CAP). The crop activities covered in the model are the main crops cultivated in the area (fallow, wheat, barley, corn, sunflower, alfalfa, rice, other crops, and CAP set-aside). To validate the model, the results on cropland utilization obtained from the model have been compared with actual cropland utilization, concluding that the model closely approximates the actual data. The model is used to characterize the behavior of the irrigation area under. three scenarios which reflect likely changes in agricultural and environmental policies: removal of direct payments, increase in water prices, and reduction of fertilizer use. The results show the large impact of these three scenarios on farmers' production decisions: die elimination of direct payment reduces net margin almost by half prices corresponding to full recovery of water costs reduce significantly the cultivated acreage; and the reduction in fertilizer use causes a fall of 23 percent in net margins. |
Has economic research answered the needs of environmental policy? (2000) 🗎🗎 | Efficient environmental regulation requires empirical estimates of the benefits and costs of environmental standards and policies. In the last 25 years, economists have made considerable progress in developing methods for measuring environmental benefits and in providing empirical estimates of costs and benefits. This paper reviews this progress. Ii examines by category of benefit the advancements made in providing estimates that can be used in benefit-cost analyses and identifies areas where additional research is required. (C) 2000 Academic Press. |
The economic benefits to agriculture of a reduction of low-level ozone pollution in The Netherlands (2000) 🗎🗎 | Low-level ozone pollution affects crop yields adversely. Reduction of ozone pollution would therefore increase crop yields and provide economic benefits to producers and consumers of farm products. This paper assesses the potential magnitude of these benefits for the Netherlands. Exposure-response functions were used to estimate initial yield responses when ozone pollution is reduced to natural background levels. These yield responses were fed into a spatial economic model of the Dutch farm sector, thereby allowing for demand and supply adjustments in all interrelated markets. A novelty in this analysis is the explicit attention to crop-livestock interactions. The annual economic benefits of ozone reduction for producers and consumers of farm products are estimated to be 310 million Euro, of which 91 million Euro goes to producers and 219 million Euro to consumers. |
Public policies and private decisions: Their impacts on Lake Erie water quality and farm economy (2000) 🗎🗎 | Since the early 1970s, pollution abatement efforts have recognized nonpoint sources and, particularly, agriculture, as major causes of pollution in the Lake Erie region. The first objective of this research is to summarize federal and state agricultural pollution abatement programs that encouraged farmers to adopt conservation practices. Next, the economic impacts of changes in farming practices are reviewed. Statistical analyses of farm-level accounting data and a farm simulation model are used to investigate the economic effects of conservation practices in the region. Finally, simulated farm pollutant emissions in 1985 and 1995 are compared to actual pollutant loadings. This comparison offers evidence that improvements in water quality are attributable to changes in farming practices, (e.g., conservation tillage adoption). |
Integrated agri-environmental modelling: A cost-effectiveness analysis of two nitrogen tax instruments in the Vejle Fjord watershed, Denmark (2000) 🗎🗎 | A method of integrated economic and environmental modelling of agricultural production effects in Denmark is presented in this paper. The method combines a partial-equilibrium sector model for Danish agriculture; farm account statistics; a GIS-based procedure for spatial disaggregation of the agricultural production structure; a procedure for calculating farm economic output, and a nitrate loading model. The method is applied by analysing two alternative nitrogen tax policies in terms of their effects on farm value added, nitrate leaching, and nitrate loading of coastal waters. The tax policies are a per-unit tax on nitrogen in commercial fertilisers; and a per-unit tax on nitrogen in commercial fertilisers and purchased animal feed stuff. The cost-effectiveness of these two tax instruments is analysed by comparing the costs of reducing nitrate leaching by 20 per cent using the two policy measures. Results suggest that: (1) there are large differences between nitrate leaching from pig, cattle, plant and part time farms, (2) predicted spatial patterns of nitrate leaching and loading exhibit considerable spatial variations, (3) abatement costs are larger in the combined tax scenario and varies significantly between farm types. (C) 2000 Academic Press. |
Modelling risk, trade, agricultural and environmental policies to assess trade-offs between water quality and welfare in the hog industry (2000) 🗎🗎 | To assess the trade-offs between water quality and welfare in North Carolina and in Quebec under different trade, agricultural and environmental policies in the pork sector, an economic model is linked to an environmental model. The economic model isa spatial mathematical programming model of US and Canadian swine industries. It is a partial equilibrium model, which is dynamic, regional and incorporates a risk variable. The objective function maximizes market welfare defined as the Marshallian measures of producer and consumer surpluses plus government payments. The objective function does not maximize social welfare, which includes the economic benefits derived from water quality, because economic values for improved water quality do not exist for the areas of interest. The objective is to maximize the area under each region's pork demand Function, adding government payments and subtracting all production, slaughter, processing, storage and distribution costs. The Erosion Productivity Impact Calculator (EPIC) is the environmental model used in concert with the economic modal. Nitrates and phosphates are the environmental indicators. Phosphates being less soluble than nitrates, are lost mainly in runoff and erosion, and hence affect surface water, while nitrates are lost in runoff and leachate contaminating ground and surface waters. The accumulation of phosphates accelerates the eutrophication process while high levels of nitrates in drinking water have been associated with maethemoglobinea, a potentially lethal blood disorder affecting infants under 6 months of age. Since welfare measures are calculated at the regional level, and water quality occurs at the local level, the trends rather than the magnitudes of water quality and welfare changes, are compared to determine if economic and environmental objectives conflict. There are four scenarios: two trade scenarios encompassing important liberalization endeavors and two environmental scenarios simulating potential nutrient management plans. In three cases out of eight, there are trade-offs between welfare and water quality. In the Southeast; including North Carolina, regional welfare decreases due to increased manure disposal costs imposed under both. nutrient plans. Welfare decreases are partly compensated by decreases of nitrates and phosphates in runoff. In Quebec, the elimination of the ban on US live hog imports in Canada allows imports of hogs from the Midwest into Quebec, which accompanies a decrease of hog inventories in Quebec. The welfare change is negative and the change in water quality with respect to nitrogen is positive. (C) 2000 Elsevier Science B.V. All rights reserved. |
Using economic incentives for pesticide usage reductions: responsiveness to input taxation and agricultural systems (2000) 🗎🗎 | There is growing interest in using environmental taxes to address the problems of agricultural pesticide contamination, given the potential of economic instruments for higher efficiency compared to regulatory approaches. However, research to date has suggested low producer responsiveness to input price changes. Tt is important to examine crop protection decisions and the options for adjustment in more detail. A case-study arable farm model is presented to evaluate the implications of new, currently experimental, low-input farming production systems for pesticide policy. If producers adhere to current systems, a pesticides tax at politically acceptable levels introduced as a stand-alone measure would perform poorly. Consistent with a number of studies, the model suggests that pesticide use levels could be reduced significantly while actually increasing farm income levels through conversion to low-input farming. Pesticide taxation cannot be viewed in isolation as a policy tool but should be part of a package of measures, including in particular education and training to encourage and assist farming system change. (C) 2000 Elsevier Science Ltd. All rights reserved. |
Priorities in cost sharing for soil and water conservation: A revealed preference study (2001) 🗎🗎 | A number of studies have questioned how successfully paid land diversion has been adapted to address broad environmental policy concerns. Similar evaluations of cost-sharing programs have not been performed. This paper uses a revealed preference approach to estimate the implicit decision criteria used to allocate federal cost-sharing funds in Maryland, during the fiscal years 1994 through 1996. Funds appear to have been awarded preferentially to projects that enhanced agricultural productivity and farm profitability. In contrast to findings regarding the CRP, however, our results do not indicate that cost share awards in Maryland were inconsistent with stated environmental quality priorities. |
Environmental and economic effects of a fall in cereal prices in the EU internal market: The case of Denmark (2001) 🗎🗎 | Reform of the European Common Agricultural Policy (the CAP) will reduce cereal prices in the Internal Market while simultaneously increasing direct support to farmers (Agenda 2000). This paper examines the possible effects of liberalisation of the CAP by modelling the effects of a 10 per cent reduction in cereal prices combined with compensation to farmers. We applied an integrated modelling system suitable for estimating both the economic and environmental consequences of agricultural and environmental policy measures and calculated the effects of a 10 per cent fall in cereal prices on nitrogen loading of the Danish marine waters, on private consumption, GDP, the balance of payments, and employment. The results indicate that price reductions do not have significant effects on nitrogen loading relative to the 50 per cent reduction target, since a 10 per cent reduction in cereal prices only leads to a 2.4 per cent reduction in loading. |
Non-separability and heterogeneity in integrated agronomic-economic analysis of nonpoint-source pollution (2001) 🗎🗎 | This paper highlights two aspects that are crucial in the management of agricultural nonpoint-source pollution, but that are typically not taken into account in applied economic studies. Firstly. production, pollution and abatement are to be treated as non-separable to include control options provided by changes in production practices. Besides. non-separability enables proper account to be taken of the material flow through production processes and changes the perspective on optimal environmental regulations. Secondly, the resolution or level of spatio-temporal aggregation should capture the heterogeneity in the economic and ecological attributes (production condition. fixed but allocatable inputs and technology set) of the individual decision-maker's policies they intend to influence. The implications of non-separability and heterogeneity for empirical studies and for policy are illustrated by two simulation studies oil nitrogen and pesticide use in crop farming. (C) 2001 Elsevier Science B.V. All rights reserved. |
Risk-indexed herbicide taxes to reduce ground and surface water pollution: an integrated ecological economics evaluation (2001) 🗎🗎 | Public policy toward pesticide use in agriculture can benefit from data coming from models that integrate ecological and economic constraints into cropping decisions and pesticide use. Herein we use such a model to focus on the environmental and economic effectiveness of a specific set of tools used to promote sustainable agriculture with less pesticide runoff - incentive-based instruments created by risk-indexed herbicide input-taxes. We measure risk by health advisory levels and by an ecological economic simulation model that estimates predicted exposure levels. We explore whether this innovative solution or herbicide input-taxes does better at reducing losses to farm net returns, and surface and groundwater loadings than quantity restrictions. Using the integrated CEEPES model, our results suggest that risk-indexed input taxes by information about individual herbicide exposure levels can be a cost-effective tool to reduce predicted groundwater exposures. No single policy, however, was efficient at simultaneously improving groundwater and surface water quality. Instead we construct an efficient policy set. We find exposure-induced taxes were most efficient for small percentage reductions in overall exposure, bans were efficient for medium reductions, and flat taxes were efficient for high reductions. (C) 2001 Elsevier Science B.V. All rights reserved. |
Farm-level benefits to investments for mitigating land degradation: empirical evidence from Ethiopia (2001) 🗎🗎 | Resource conservation programs have often been launched without careful evaluation of farmers' intertemporal tradeoffs in undertaking conservation investments. Such investments often have long pay back periods and reduce short-term household incomes. The critical question is whether long-term benefits would be sufficient to compensate farmers' immediate costs. Lack of empirical data on crop responses to soil erosion has hindered policy-relevant research. This study uses empirical data from the Ethiopian highlands to estimate the damage from soil erosion and evaluate the profitability of proposed conservation investments. A farm-level model is developed to study economic incentives to implement proposed conservation methods. Results show that incentives to invest in conservation practices are very low except for low cost methods like grass strips. The yield penalty due to area loss and high investment costs contribute to this. Policies focusing on minimizing the area loss effect and subsidizing the initial investment costs are shown to improve farmers' incentives to conserve the soil. A preferred policy option in the short-term is supporting low cost technologies that provide short-term benefits to poor farmers. |
Endogenous technology switches in Dutch dairy farming under environmental restrictions (2001) 🗎🗎 | In this paper an applied general equilibrium (AGE) model written in mixed-complementarity format is used to analyse the effects of an increase in milk quota in the Netherlands when nitrogen emissions in agriculture are restricted. The model combines the strengths of AGE models and mathematical programming models, which allows economy-wide policy analyses when technology switches are allowed. Results show that a welfare gain can be achieved by increasing milk quota while keeping nitrate (N) emissions in agriculture at the same level. Under such a policy change inactive N-extensive technologies in dairy farming become active and (partly) replace N-intensive technologies. Output in other agricultural industries decreases. |
Cost and trade impacts of environmental regulations: effluent control and the New Zealand dairy sector (2001) 🗎🗎 | New Zealand legislation sets standards for water quality. Nitrogen leaching from dairy effluent compromises these standards, with the consequent move being toward land-based effluent disposal. The cost of this to the dairy sector was estimated and a Computable General Equilibrium (CGE) model (GTAP) was used to investigate the impact of additional production costs on NZ's dairy export trade. Two scenarios were analysed: first, NZ acts unilaterally in imposing water quality regulations, second, the other principal dairy exporters act in a similar fashion. Changes in trade patterns vary from insignificant to large, depending on the scenario analysed. |
Reconsidering agri-environmental policy permitted by the Uruguay round agreement (2001) 🗎🗎 | Agri-environmental policies are increasingly being used to redress the balance between jointly-produced agricultural and environmental outputs, and are permitted by the Uruguay Round (UR) agreement with the general provision that they not distort trade. In this paper we argue that any market consequences of efficient, welfare-enhancing agri-environmental policies should not be considered trade-distorting. To consider them so is inconsistent with economic efficiency and with ecological integrity. Social cost-benefit analysis (CBA) is a more appropriate test and guide of trade-consistency for agri-environmental policies, and using trade effects as the test may not enhance social welfare. Moreover, specific provisions in the UR agreement restricting payments under agri-environmental policies to opportunity costs are not warranted on economic efficiency grounds, and consign the environment to a status subsidiary to agricultural output. (C) 2001 Elsevier Science B.V. All rights reserved. |
Pesticide taxation and multi-objective policy-making: farm modelling to evaluate profit/environment trade-offs (2001) 🗎🗎 | Many countries in Western Europe have introduced voluntary programmes to encourage farmers to adopt environmentally more benign practices such as integrated pest management, but more policy action appears to be needed to meet the environmental quality levels now demanded. Input taxes could assist in meeting policy objectives. The issue considered here is the identification of the most appropriate specification of a tax instrument to reduce the environmental problems of agricultural pesticide usage. This paper takes a farm systems approach to evaluation. A case-study illustration is given for a specialist arable farm in the UK, combining an economic model of land use and production with a set of environmental indicators for pesticides. Linking these two components allows the identification of the potential trade-offs between achieving reductions in the environmental burden to a number of ecological dimensions and farm income. Different pesticide tax specifications vary in both the magnitude and the direction of their impacts. The results of the model indicate that either compromises will have to be made in environmental policy, or additional instruments will be required to counter-act the negative side-effects of some instruments. (C) 2001 Elsevier Science B.V. All rights reserved. |
Capturing experts' uncertainty in welfare analysis: An application to organophosphate use regulation in US apple production (2001) 🗎🗎 | The use of organophosphate insecticides in apple production has become of regulatory concern since the Food Quality Protection Act passed into law in 1996, Through an expert opinion survey, we assess the economic impact of possible regulatory scenarios on the apple industry. Because experts are unsure of the impacts, we ask them for distributions of impacts to explicitly capture the uncertainty they face. We apply Bayesian methods to aggregate these distributions. Welfare impact distributions for different policy scenarios are estimated and ordered using a nonparametric test for stochastic ordering of probability distributions to facilitate policy decision making. |
US hog production and the influence of state water quality regulation (2001) 🗎🗎 | The U.S. hog industry is experiencing an increase in both the average size and in the geographical concentration of feeding operations. These increases have caused public attention to focus on the environmental consequences of hog production and on the regulations imposed to limit these consequences. This study examines the influence of state water quality regulatory stringency on hog production in the United States. The results of this analysis provide evidence that environmental compliance costs are significant for small hog feeding operations, while production on large operations does not appear to be influenced by the level of state environmental regulatory stringency. |
Determinants of the willingness of Belgian farmers to participate in agri-environmental measures (2002) 🗎🗎 | This paper explores the willingness of Belgian farmers to participate in two voluntary agri-environmental policies. Farmers' contingent behaviour is analysed on the basis of survey data. Derivations based on a conceptual micro-economic model indicate that decision subject and decision maker characteristics are important for farmers' participation. The model is empirically tested through the specification and estimation of a probit model. Consistency is found between the theoretical framework and the empirical results indicating that both the expected effect on farm production and the farmers' environmental attitude, which is more positive among younger and better educated farmers, are significant determinants of the acceptance rate of agri-environmental policies. Other variables which influence participation decisions are farm size and previous experience of farmers themselves or of neighbouring farmers with agri-environmental measures. |
Moral hazard and risk management in agri-environmental policy (2002) 🗎🗎 | This paper develops the key finding of Ozanne, Hogan and Colman (2001) that risk aversion among farmers ameliorates the moral hazard problem in relation to agri-environmental policy compliance. It is shown that risk averse farmers who face uncertainty in their production income are more likely to comply with such a policy as a means of risk management. In addition, it is shown that a principal who has control over both the level of monitoring and the size of penalty, if detected, can reduce non-compliance by adjustments to these instruments which increase the variance of farmers' income but leave the expected penalty unchanged. It is concluded that risk management by both principals and agents has the potential to diminish the moral hazard problem, especially given proposed developments in agri-environmental policy in the European Union. |
Willingness to pay for water quality improvements: The case of precision application technology (2002) 🗎🗎 | A contingent valuation survey conducted in Mississippi is used to assess public willingness to pay for reductions in agricultural nonpoint pollution. The analysis focuses on implementation of a policy to provide farmers with precision application equipment to reduce nutrient runoff. Findings suggest public support exists for such policies. This study also finds that inclusion of debriefing questions can be used to refine willingness-to-pay estimates in contingent valuation studies. A nonparametric scope test suggests respondents are sensitive to level of runoff reduction and associated water-quality benefits. |
Environmental policies for a multifunctional agricultural sector in open economies (2002) 🗎🗎 | This paper derives the efficient set of policies for a multifunctional agriculture and relates them to trade. In general, efficiency cannot be achieved through simple output subsidies, but the efficient policies to move closer to socially optimal levels of multifunctional, non-commodity outputs may also change commodity output levels. Accounting for international price effects, large importing and exporting nations have incentives to favour subsidies for non-commodity outputs and to oppose them, respectively, regardless of the true value of these agriculturally related public goods. The policy incentives are illustrated through a stylised simulation of US agriculture. |
Designing voluntary agri-environment policy with hidden information and hidden action: A note (2002) 🗎🗎 | Moxey, White and Ozanne (1999) show how transfer payments, coupled with input quotas, can be used to design optimal truth-telling mechanisms for voluntary agri-environmental schemes under hidden information about compliance costs. In this note I derive the input charge/transfer payment analogue of this model and extend the model to analyse the design of contracts under hidden actions as well as hidden information. This leads to the following results: first, an input charge/transfer payment policy is more efficient than a quota where the regulator cannot observe compliance costs; second, and more significantly, where the regulator faces both hidden costs and hidden actions, an input charge policy allows for a relatively simple mechanism design. |
Joint pollution control at a catchment scale: compliance costs and policy implications (2002) 🗎🗎 | Agricultural activities are one of the major drivers of increased nutrient levels such as nitrogen (N) and phosphorus (P) to both terrestrial and aquatic ecosystems. Elevated nutrient concentrations are associated with degraded water quality that can result in potential impacts for human health and the environment. A recent European study has identified elevated concentrations of N and P for many European river monitoring stations. In many cases the management of N and P has been considered separately here we address the multi-dimensional issue of water quality where the simultaneous management and control of both N and P is considered desirable. Using an integrated modelling approach various nutrient management scenarios are examined. It is found that although the control of N and P involve different farm adjustments and induce different land use changes there is a certain degree of complementarity between these two nutrient controls. The policy implication of ignoring such complementarity is that the appropriate environmental taxes to control the required nutrient losses are overestimated, resulting in unnecessary welfare losses to the society. (C) 2002 Elsevier Science Ltd. All rights reserved. |
Nitrogen in the Baltic Sea - policy implications of stock effects (2002) 🗎🗎 | We develop an optimal control model for cost-effective management of pollution, including two state variables, pollution stock and ecosystem quality. We apply it to Baltic Sea pollution by nitrogen leachates from agriculture. We present a sophisticated, non-linear model of leaching abatement costs, and a simple model of nitrogen stocks. We find that significant abatement is achievable at reasonable cost, despite the countervailing effects of existing agricultural policies such as price supports. Successful abatement should lead to lower nitrogen stocks in the sea in 5 years or less. However, the rate of ecosystem recovery is less certain. The results are highly dependent on the rate of self-cleaning of the Baltic Sea, and less so on the discount rate. Choice of target has a radical effect on the abatement path chosen. Cost-effectiveness demands such a choice, and should therefore be used with care when stock effects are present. (C) 2002 Elsevier Science Ltd. All rights reserved. |
Resource management under production and output price uncertainty: Implications for environmental policy (2002) 🗎🗎 | Various environmental policies have been proposed to control agricultural runoff of nutrients and pesticides. The impacts of these policies on input use are complicated because of the various sources of uncertainty farmers face and the precise nature of farmers' risk attitude. A risk-averse farmer's response to changed profit, input, and output taxes under output price and production uncertainty is examined. The impact of these policies on input use depends on the form of production uncertainty, risk-input relationships, risk attitudes, and degrees of output price and production uncertainty. These results have implications for the design and implementation of environmental and other production-related policies. |
Cost-effectiveness of alternative green payment policies for conservation technology adoption with heterogeneous land quality (2002) 🗎🗎 | This paper quantitatively analyses the cost-effectiveness of alternative green payment policies designed to achieve a targeted level of pollution control by heterogeneous microunits. These green payment policies include cost-share subsidies that share the fixed costs of adoption of a conservation technology and/or input reduction subsidies to reduce the use of a polluting input. The paper shows that unlike a pollution tax that achieves abatement through three mechanisms, a negative extensive margin effect, a negative intensive margin effect and a technology switching effect, a cost-share subsidy and an input reduction subsidy are much more restricted in the types of incentives they provide for conservation of polluting inputs and adoption of a conservation technology to control pollution. Moreover, they may lead to varying levels of expansion of land under production. Costs of abatement with alternative policies and implications for production and government payments are compared using a simulation model for controlling drainage from irrigated cotton production in California, with drip irrigation as a conservation technology. (C) 2002 Elsevier Science B.V. All rights reserved. |
Efficient policies for environmental protection: An econometric analysis of incentives for land conversion and retention (2002) 🗎🗎 | This study investigates the costs of subsidies for land retention and conversion, in addition to a policy that combines these incentives. A Markov model of forest and agricultural land use is estimated for the U.S. South Central region and used to simulate retention and conversion policies. Results suggest a conversion policy is less costly for increasing forest area, and a retention policy is less costly for increasing agricultural land area. The costs of separate subsidies can be up to 300% higher than the costs of combined incentives. However, when administrative costs are taken into account, conversion policies are likely to be less costly. |
The objective of this paper is to show the effects of alternative sectoral policies on privatization, production, labor use, and agricultural trade in Yugoslavia's agricultural sector. Bilevel programming method is used since decision making process involves the independent decision making units, namely government and state and private farms. Most important results of the model indicate that policies inducing moderate and partial privatization in the short and intermediate run will best increase efficiency of the agricultural sector. Even partial privatization, however, does not prevent an immediate layoff of a large portion of the state sector agricultural workers what may cause further destabilization of the economy. (C) 2002 Society for Policy Modeling. Published by Elsevier Science Inc. All rights reserved. | |
Development policies, resource constraints, and agricultural expansion on the Philippine land frontier (2002) 🗎🗎 | This paper examines ways in which development policies interact and influence incentives for agricultural expansion in frontier areas. We develop a model of household response to economic and technical stimuli, conditional on agronomic and household characteristics. We evaluate the model empirically using survey data gathered from low-income corn and vegetable farms near a national park in the southern Philippines. We find that within farms, land allocation is responsive to relative crop prices and yields. However, different crops elicit different responses. In particular, some crop expansion takes place primarily through land substitution and intensified input use, while changes in prices or yields of other crops induce an expansion of total farm area. Land and family labor constraint bind at different points for different crops. These results suggest that because multiple policies interact, environmental policies must have multiple strands in order to replace incentives to further land expansion. |
The three E's - efficiency, equity, and environmental protection - in search of "win-win-win" policies - A CGE analysis of India (2002) 🗎🗎 | Economists are trained to identify the trade-offs in objectives implicit in virtually every type of policy proposal. The purpose of this paper is to show that, in a poor developing country like India, existing policies conspire to damage the environment, reduce the level of income and the rate of growth, and increase income inequality. It uses an environmentally extended computable general equilibrium model (EECGE) for India to demonstrate that simple policy changes can be made which would raise distributional equity, environmental sustainability, and growth-increasing efficiency all at the same time. The results support the hypothesis that sustainable development is generally possible only when there is a thorough integration of economic, distributional, and environmental policies that can collectively "win" in achieving economic growth, equity, and environmental objectives at the same time. (C) 2002 Society for Policy Modeling. Published by Elsevier Science Inc. |
The health and visibility cost of air pollution: a comparison of estimation methods (2002) 🗎🗎 | Air pollution from motor vehicles, electricity-generating plants, industry, and other sources can harm human health, injure crops and forests, damage building materials, and impair visibility. Economists sometimes analyze the social cost of these impacts, in order to illuminate tradeoffs, compare alternatives, and promote efficient use of scarce resource. In this paper, we compare estimates of the health and visibility costs of air pollution derived from a meta-hedonic price analysis, with an estimate of health costs derived from a damage-function analysis and an estimate of the visibility cost derived from contingent valuation. We find that the meta-hedonic price analysis produces an estimate of the health cost that lies at the low end of the range of damage-function estimates. This is consistent with hypotheses that on the one hand, hedonic price analysis does not capture all of the health costs of air pollution (because individuals may not be fully informed about all of the health effects), and that on the other hand, the value of mortality used in the high-end damage function estimates is too high. The analysis of the visibility cost of air pollution derived from a meta-hedonic price analysis produces an estimate that is essentially identical to an independent estimate based on contingent valuation. This close agreement lends some credence to the estimates. We then apply the meta hedonic-price model to estimate the visibility cost per kilogram of motor vehicle emissions. (C) 2002 Elsevier Science Ltd. |
Cross-achievements between policies for drinking water protection (2002) 🗎🗎 | Environmental dynamics have important spatial dimensions, which calls for a spatial approach in policy analyses. Further to this, assessing agri-environmental policies involves analyses of individual measures as well as their combined effects on farmer behaviour and the environment. The integration of an economic behavioural model in a spatial framework has enabled analyses of a geographically targeted subsidy scheme for drinking water protection in combination with a uniform tax on commercial nitrogen fertilizer. Results show that policy measures for reducing nitrogen use can have combined effects (cross-achievements), thereby affecting each other's cost-effectiveness. Cross-achievements between a nitrogen fertilizer tax and a subsidy scheme based on elicitation are shown not to be additive, making partial analyses of policy measures more uncertain. (C) 2002 Academic Press. |
Natural resource and environmental policy trade-offs: a CGE analysis of the regional impact of the Wetland Reserve Program (2002) 🗎🗎 | There are perceived fundamental conflicts between agriculture, in terms of land use, and the societal goals of sustained environmental quality improvements. Regulatory policy response is often criticized for having the potential of adversely affecting agricultural production and the economy. The Wetland Reserve Program (WRP) is intended to be an alternative approach, aiming to improve environmental quality without significantly impacting the agricultural production or the economic wellbeing of the concerned re.-ions. Using a computable general equilibrium modeling approach, we examine the impact of the WRP on the regional economy of Louisiana. Results show no significant negative impact on the economy as a whole, but effects on particular sectors within the economy may differ significantly. (C) 2002 Elsevier Science Ltd. All rights reserved. |
Team approaches in reducing nonpoint source pollution (2003) 🗎🗎 | It is technically difficult and costly to monitor nonpoint source pollution. Consequently, most economic instruments directed towards reducing this type of pollution have focused on circumventing the monitoring problem by focusing on readily observable factors. Such instruments include taxes or tradable pen-nits on inputs or other incentives to induce changes in fanning practices. One difficulty with such approaches is that the incentives may not be consistent with the primary objectives of the policies-to reduce nutrient runoffs. This paper seeks to identify under what conditions it would be beneficial to apply more direct incentives for reduced nutrient runoffs. Monitoring and enforcement are core issues in this connection. It is still difficult to monitor individual farm field runoffs. Hence, the incentive problems associated with multiple agents emitting to the same recipient need to be resolved. (C) 2003 Elsevier B.V All rights reserved. |
The relative cost-efficiency of arable nitrogen management in Sweden (2003) 🗎🗎 | Arable nitrogen emissions contribute to serious water-quality problems around the globe. To reduce pollution of the Baltic Sea, Sweden has implemented a comprehensive scheme of nitrogen abatement instruments; a uniform nitrogen fertilizer tax, green payments (subsidies), and land-use regulations. The purpose of this study was to evaluate the relative cost-efficiency of the scheme and to analyze the implications of agricultural policy for the least-cost solution. Due to the expanse and heterogeneity of the study area, a spatially distributed nonlinear mathematical programming model, which linked changes in agricultural production practices on crop farms in Southern Sweden to coastal nitrogen load, was developed. Spatial variation in physical parameters, production costs, and the fate and transport of nitrogen were accounted for. Interactions between agricultural and nitrogen policy were shown to occur. Least-cost abatement measures changed radically with and without agricultural policy. Nitrogen policy can be construed as simply correcting for pollution induced by agricultural policy. (C) 2003 Elsevier B.V. All rights reserved. |
Cost-effective reductions of stochastic agricultural loads to the Baltic Sea (2003) 🗎🗎 | Overenrichment of nutrients is a major environmental problem in the Baltic Sea region. Large loads of nitrogen and phosphorus cause eutrophication in both the coastal regions and the open sea. The purpose of this paper is to calculate cost-effective solutions to nutrient load reductions to the Baltic Sea, while taking into account the stochastic relationship between abatement measures and the corresponding impact on nutrient loads. The role of variance of loads from different regions as well as covariance between loads is explored analytically and empirically. It is emphasized that within a large watershed, covariance between loads may be negative, zero or positive depending on the meteorological properties of the region. The results show that the cost of reducing nutrient loads from agricultural sources and coastal point sources by 50% can be 80% higher if policy-makers care about load variation and the reduction should be reached with 95% certainty, compared to a situation where they do not care. If covariance of loads between regions was ignored, the total cost would be underestimated by more than 20% if the target should be met with 95% certainty. The results are sensitive to assumptions about cost functions and nutrient transports. (C) 2003 Elsevier B.V. All rights reserved. |
Integrating economic, environmental and GIS modeling to target cost effective land retirement in multiple watersheds (2003) 🗎🗎 | An integrated framework of economic, environmental and GIS modeling is developed to study cost-effective retirement of cropland within and across multiple watersheds to achieve environmental goals. This framework is applied to 12 contiguous agricultural watersheds in the Illinois Conservation Reserve Enhancement Program region of the United States. A key goal of this program is to reduce sediment loadings in the Illinois River by 20% by retiring land from crop production. The characteristics of land parcels to be targeted for retirement within each watershed and the criteria for cost-effective allocation of abatement responsibility across watersheds are analyzed. Our analysis suggests that program costs are minimized when the abatement standard is set for the region rather than uniformly for each watershed. For both policy scenarios, the land parcels targeted for retirement should be those that are highly sloping and adjacent to a water body. (C) 2003 Elsevier B.V. All rights reserved. |
How labour organization may affect technology adoption: an analytical framework analysing the case of integrated pest management (2003) 🗎🗎 | Integrated Pest Management (IPM) is an important component of sustainable agriculture. Farmers who switch from a more capital-intensive pesticide-based pest management strategy to IPM have to substitute capital with labour. The adoption of IPM will therefore depend, among other things, on the opportunity costs of labour. A simple model analyses the trade-off between IPM and current farmers' best practice in developing countries. Modifications of the model include different forms of labour organization in pest management, such as owner operated and short- and long-term labour contracts. The implications are that agricultural policies, environmental policies, and labour market policies can go hand in hand. Unfortunately, this will be more likely at a higher level of original pesticide use and hence a higher level of environmental costs. |
Multi-function grasslands: what part for the market and public policy? (2003) 🗎🗎 | Unfavourable or no incentives at all make farmers use insufficient grassland areas, from the point of view of the society and economic efficiency. On the one hand the CAP premium encourages exploiting more crops and less grasslands than what real profit would imply. On the other hand, the fanner who seeks to maximise his profit does not consider the effects external to the market due to the lack of incentives. The market could, however, contribute to the provision of grasslands the society needs, because milk and meat produced by grass-feeding have specific characteristics valued by the consumer. Nevertheless, the public good characteristics of grasslands make market failures remain and public policy becomes necessary. The conception of efficient policies for grassland multifunctionality requires the survey of transaction costs and jointness between breeding and grassland. The different kinds of grassland premium probably allow to make environmental benefits without excessively increasing the transaction costs in comparison to price support. |
Sustainable farm income in the presence of soil erosion: an agricultural Hartwick rule (2003) 🗎🗎 | Soil erosion is a physical and economic problem of natural capital degradation. Even along an intertemporally efficient trajectory, one can have in a loss of soil fertility and a continuous decline of agricultural net revenue. Moreover, soil erosion is a major source of surface water pollution in rural areas. Erosion control is thus a challenge for sustainable resource management and internalizing external effects. To sustain the level of farm income, an 'agricultural Hartwick rule' is proposed which addresses both on-farm and off-farm effects of soil erosion. First, it requires the investment of the soil rents into alternative capital. Second, additional measures are required to comply with an ambient quality target. A charge-subsidy scheme proves the most adequate from a perspective of cost-effectiveness and sustainability, if effluent charge revenues are earmarked to subsidize cropland retirement at the watershed scale. In combination with the investment of soil rents this enables to maintain the level of farm income constant over time while respecting the ambient quality target. Altogether, this fulfills the requirements of efficiency and sustainability. (C) 2003 Elsevier Science B.V. All rights reserved. |
Agri-environmental externalities: a framework for designing targeted policies (2003) 🗎🗎 | The optimal provision of agri-environmental externalities is studied in a model of endogenous input use and land allocation augmented by their effects on biodiversity, landscape diversity and nutrient runoffs. Whereas biodiversity and landscape diversity are public good aspects of agriculture, nutrient runoffs are negative externalities. We show that fertiliser use is higher and the size of buffer strips lower at the private optimum than at the social optimum. The socially optimal land allocation differs from the private solution as a result of the valuation of diversity benefits and runoff damages. The socially optimal policy under heterogeneous land quality involves a differentiated fertiliser tax and a differentiated buffer strip subsidy. We use Finnish data to characterise empirically the socially optimal design of policy instruments. |
Impact of environmental policies in the hog-pork sector on trade and market welfare in North America (2003) 🗎🗎 | The objective of this study is to design a framework to assess trade patterns and market welfare (Marshallian measures of producer and consumer surpluses plus government payments) under various combinations of agricultural, environmental and trade policies. To reach this objective, an environmental model, EPIC, is linked to a model of the North American hog-pork sector. The reduction in Quebec inventories, following the implementation of environmental policies, triggers a decrease of Canadian live hog exports to the U.S. and an increase of U.S. pork exports to Canada. Environmental policies are responsible for decreases in welfare. The decrease in welfare is the largest when a moratorium in North America is simulated. Since trade liberalization has a positive impact on welfare, the welfare decrease from a moratorium is somewhat attenuated under free trade conditions. |
Institutional arrangements to improve water quality in irrigated agriculture (2003) 🗎🗎 | Irrigated agriculture is closely linked to water quality problems throughout the western United States. In this paper it is argued that the market failure paradigm is not adequate as an environmental policy guide, especially for water quality problems involving individual irrigators. An alternative stewardship paradigm is developed and applied to nitrate pollution of groundwater in central Nebraska. This paradigm holds that producers are not profit maximizers, that information is imperfect and that producers care enough about the environment to voluntarily substitute some environmental qualily for income. The analysis suggests that education can produce significant improvements in environmental quality, and that in some circumstances education may be more effective than regulations or incentive-based strategies. |
The environmental supply of farm households - A flexible willingness to accept model (2003) 🗎🗎 | The purpose of the paper is to analyse farmers' participation in environmental schemes, which are gaining a growing importance within the European agricultural policy. These schemes are implemented through voluntary contracts that pay farmers for the provision of environmental services. The microeconomic model that is developed is a farm household model that incorporates the producer and consumer behaviour of the farmer to optimise his environmental supply considering that the environmental service that he is supplying also has the characteristics of a public good. Defined as the difference between the profit loss in providing the environmental service and the willingness to pay to consume this service, the household's "willingness to accept" (WTA) is compared with two flexible WTA measures that account for the technological flexibility of the environmental supply. Data come from a survey of an agri-environmental scheme implemented in the Walloon region of Belgium since 1995 and intended to protect the nesting of some endangered bird species. Econometric results show that contingent valuation is a reliable method to reveal the behaviours of farmers facing the invitation to participate in this scheme. They also confirm that farmer behaviour is also influenced by environmental preference. |
Value of agricultural non-point source pollution measurement technology: assessment from a policy perspective (2004) 🗎🗎 | The development of accurate non-point source pollution assessment technologies allows the implementation of more efficient policies than can be undertaken in their absence. This study estimates the value of accurate measurement technology by estimating the gains from implementing a more efficient policy, one that targets agricultural non-point source emission reductions at the field scale but requires accurate field scale measurement technology, relative to a practice-based policy that can be implemented in the absence of such technology. For the environmental benefit of carbon sequestration, large cost savings are found due to improved targeting of conservation tillage subsidies for the state of Iowa. The ability of the government to cost discriminate is found to have little impact on the value of accurate measurement technology. |
Environmental regulation and the spatial structure of the US dairy sector (2004) 🗎🗎 | Substantial public scrutiny about adverse environmental impacts of the dairy sector has resulted in increased environmental regulations. A behavioral model of location and production is developed to examine the impacts of environmental regulations, traditional location factors, and agglomeration economies on the spatial structure and geographical location of dairy production. The results show that counties in the states with more stringent environmental regulations tend to lose dairy inventories to those with less stringent policies. There are substantially meaningful spatial patterns of dairy production. Current dairy production levels are positively correlated while changes in production levels are negatively correlated across counties. |
An analysis of the effects of uncertainty and irreversibility on farmer participation in the Conservation Reserve Program (2004) 🗎🗎 | A real options model is developed to examine the determinants of farmer participation in the Conservation Reserve Program (CRP). This study contributes to the literature by developing a framework for ex post analysis of uncertainty and irreversibility. It extends the applications of real options models to analyze farmer participation in the CRP. The model incorporates land and owner attributes, and determines whether uncertainty and irreversibility affect the probability of participation. Option values play a significant role in farmer decisions to retire land by reducing the probability of participation. These results have implications for the design and implementation of conservation programs. |
The manure hits the land: Economic and environmental implications when land application of nutrients is constrained (2004) 🗎🗎 | The discharge of manure nutrients into area waters from confined animal feeding operations is considered a leading contributor to U.S. water quality impairments. An option to mitigate these impairments is to constrain land application of manure. When these constraints are particularly binding, due to minimal acceptance of manure as a substitute for commercial fertilizer, potentially large and unanticipated changes in returns to agricultural production and water quality may occur. Moreover, some of the cost of meeting the constraints is passed on to consumers through higher prices and to a portion of rural economies through lower production rates and labor expenditures. |
Exploiting decision heuristics and IT in the design of a DSS for voluntary agri-environmental programs (2004) 🗎🗎 | Low participation rates by farmers in voluntary agri-environmental programs may depend on rationally bounded ex ante estimates of the negative effect of program enrollment on farm income. Uncertainty and the presence of information transaction costs may lead to the use of heuristics by farmers to reduce adoption decision costs. This paper describes how LENNART, a net-based decision support system (DSS), has been designed to exploit the use of heuristics and provide low cost access to information. The model has been developed to evaluate the effects of agronomic measures on farm income and on the leaching of nutrients from cultivated fields. A subsidy program for catch crop cultivation in Southern Sweden served as the basis for development of the DSS and is used throughout the paper for purposes of illustration. (C) 2004 Elsevier B.V. All rights reserved. |
Incentives for technology adoption under environmental policy uncertainty: Implications for green payment programs (2004) 🗎🗎 | Water quality protection policy in the United States has been based on the provision of financial incentives to farmers for adopting improved nutrient management practices. Increasing reliance on subsidy programs could result in expectations for such programs in the future. Using an option-value model that indicates uncertainty can lead to a delay in investment, this paper analyzes the extent to which uncertainty about cost-share subsidy policies would impact adoption decision. Application of the model to adoption of site-specific technologies indicates that uncertainty about subsidy policies has the potential to impact the investment decision. When there is currently no cost-share subsidy, an increase in the probability of an expected policy delays adoption. If the policy is in effect, an increase in the probability of a withdrawal of the program encourages investment. Cost-share subsidy policy is most effective when it is immediately offered and guaranteed that it will be removed soon. |
Administrative costs and instrument choice for stochastic non-point source pollutants (2004) 🗎🗎 | This paper extends the empirical analysis of non-point source pollution to the case where the pollutant is stochastic and alternative regulatory instruments have different administrative costs. It also applies a method of stochastic programming where emissions are log-normally distributed. For the Kennet catchment in South West England we rank a range of policies in terms of abatement costs alone, and total costs ( abatement and administrative costs). On the basis of abatement costs alone, a uniform emission tax is the cost minimising policy, but on the basis of total cost a nitrogen input tax is the least-cost policy. Furthermore, the policy ranking, based on total costs, changes as the reliability standard increases. |
Uniform or discriminating payments for environmental production on arable land under asymmetric information (2004) 🗎🗎 | Uniform payments are often made to farmers for providing environmental goods (e.g. wetland or semi-natural landscape) on arable land. Assuming hidden information on farmers' costs of converting land for environmental purposes, this paper investigates under what conditions a uniform policy (flat-rate payment) is better than a more sophisticated mechanism that reflects provision costs. A simplified analytical case shows indeterminate results. The ranking of net benefits under the two policies depends on the relationship between the second derivatives of the environmental value and cost functions. A numerical demonstration of arable conversion to wetland in southwestern Sweden shows that net benefits under the two policies can differ significantly. |
Water quality co-effects of greenhouse gas mitigation in US agriculture (2005) 🗎🗎 | This study develops first-order estimates of water quality co-effects of terrestrial greenhouse gas (GHG) emission offset strategies in U.S. agriculture by linking a national level agricultural sector model (ASMGHG) to a national level water quality model (NWPCAM). The simulated policy scenario considers GHG mitigation incentive payments of $25 and $50 per tonne, carbon equivalent to landowners for reducing emissions or enhancing the sequestration of GHG through agricultural and land-use practices. ASMGHG projects that these GHG price incentives could induce widespread conversion of agricultural to forested lands, along with alteration of tillage practices, crop mix on land remaining in agriculture, and livestock management. This study focuses on changes in cropland use and management. The results indicate that through agricultural cropland about 60 to 70 million tonnes of carbon equivalent (MMTCE) emissions can be mitigated annually in the U.S. These responses also lead to a 2% increase in aggregate national water quality, with substantial variation across regions. Such GHG mitigation activities are found to reduce annual nitrogen loadings into the Gulf of Mexico by up to one half of the reduction goals established by the national Watershed Nutrient Task Force for addressing the hypoxia problem. |
Economic framework for decision making in biological control (2005) 🗎🗎 | Economic analyses are a valuable input into the decision-making process for biological control programs. The challenge though is how to incorporate qualitative risk assessments of biological control programs, or the risk of nontargeted effects into mathematical economic models. A technique known as threshold cost/benefit analysis is presented and an example on how to apply this method is illustrated using the yellow starthistle biological control program. The results show that incorporating uncertainty into the analysis can have a significant impact on the decision to undertake a biological control program. (c) 2005 Elsevier Inc. All rights reserved. |
The consequences of cobenefits for the efficient design of carbon sequestration programs (2005) 🗎🗎 | In this paper, we study the social efficiency of private carbon markets that include trading in agricultural soil carbon sequestration when there art? significant cobenefits (positive environmental externalities) associated with the practices that sequester carbon. Likewise, we investigate the efficiency of government run conservation programs that are designed to promote a broad array of environmental attributes (both carbon sequestration and its cobenefits) for the supply of carbon. Finally, policy design and efficiency issues associated with the potential interplay between a private carbon market and a government conservation program are studied. Empirical analyses for an area that represents a significant potential source of carbon sequestration and its associated cobenefits illustrate the magnitude and complexity of these issues in real world policy design. |
Greenhouse gas abatement policies and the value of carbon sinks: Do grazing and cropping systems have different destinies? (2005) 🗎🗎 | This paper presents a case study in which the effects of agri-envirorimental policy on two Mediterranean-type farming systems, grazing dominant and cropping dominant, are contrasted. Two greenhouse gas abatement policies are examined; an emissions taxation policy and an emissions restrictions policy. The study seeks to determine firstly, how the policy impacts on the farming systems, and from that, how the nature of the farming systems impact on the effectiveness of the policy. It is shown that relative costs of abatement are higher for the grazing-dominant farming system. However, in the absence of technological change to aid abatement, the cost of substitution from high emitting enterprises, such as livestock, to low emitting enterprises, such as crop production, will determine the cost of abatement. For both farming systems the restriction policy is found to be more effective and economically efficient than the taxation policy. The analysis found that crediting trees as carbon sinks can significantly reduce the costs of abatement. At predicted emissions permit prices, trees would be adopted by both farming systems to offset farm greenhouse gas emissions. (c) 2005 Elsevier B.V. All rights reserved. |
Efficient waste? Why farmers over-apply nutrients and the implications for policy design (2005) 🗎🗎 | Understanding why farmers over-apply fertilizer is essential to designing effective agro-environmental policy. If farmers are simply inefficient, possibilities exist for simultaneously improving farm profits and the environment. If not, costly trade-offs are necessary This article examines why farmer perceptions of agronomic advice, input substitutability, hidden opportunity costs, uncertainty, and risk aversion can make it economically rational to "waste" fertilizer by applying it above agronomically recommended rates. I use this information to evaluate the relative merits of policy responses such as insurance, education, cost-shares, regulation, taxes, and land retirement. |
Agriculture's likely role in meeting Canada's Kyoto commitments (2005) 🗎🗎 | Voluntary adoption of beneficial management practices will be the primary means by which farmers cat net greenhouse gas (GHG) emissions. The offset system will not be a major driver clue to (a) the relatively low prices likely to be offered by large final emitters facing an emission cap, (b) discounts applied to those prices for temporary sequestration, (c) the transaction costs and risk premiums associated with signing carbon contracts, and (d) the low elasticity of supply CO2 abatement. Although Canadian farmers are likely to participate to only a limited extent in the carbon-offset market, many will find it profitable to adopt one or more of the BMPs for reducing net GHG emissions. Canadian agriculture is likely to contribution significantly to net emission on reductions by voluntarily sequestering carbon due to the adoption of zero till in the last decade, and possibly by cutting fertilizer levels in the next decade. The contribution will be mainly a response to meeting personal economic objectives rather than being induced by direct incentives through the offset Program. |
The value of site-specific information and the environment: Technology adoption and pesticide use under uncertainty (2005) 🗎🗎 | Remote sensing technology offers an opportunity to significantly increase the amount of site-specific information about field characteristics such as pest populations. Coupled with variable rate application technologies, this added information has the potential to provide environmental benefits through reduced pesticide applications. However, producers face a complicated adoption decision because output prices and crop yields are uncertain. A model is developed to examine the potential value of remote sensing information to pesticide applications in an option-value framework under uncertainty. Simulations suggest that remote sensing information could decrease pesticide use, but uncertainty and irreversibility are likely to limit technological adoption by farmers. Potential cost-share subsidies are discussed. (c) 2005 Elsevier Ltd. All rights reserved. |
Cost-effective nitrogen leaching reduction as influenced by linkages between farm-level decisions (2005) 🗎🗎 | This article focuses on how the linkages between various farm-level decisions affect the choice of measures to reduce nitrogen leaching from crop production. A mathematical programming model is developed. The model considers not only management decisions that affect nitrogen leaching directly, but also other decision variables such as scheduling of field operations and machinery investments. A simplified analysis that ignores the latter management decisions, and the linkages between the various decisions, may result in abatement policies that are not cost-effective because the policies will have other effects than expected. As an example, the empirical results show that subsidies to catch crops and spring ploughing may contribute to increased nitrogen load, quite contrary to the purpose of these subsidies. Further, it is noted that the characteristics of the production system make it costly to change land use, tillage practices, or fertilizer use drastically. Instead, cost-effective nitrogen abatement includes a mix of various adjustments of farm-level production practices. The EU set-aside payment appears to reduce abatement costs. |
Transboundary spillovers and decentralization of environmental policies (2005) 🗎🗎 | Most US federal environmental policies allow states to assume responsibility for implementation and enforcement of regulations; states with this responsibility are referred to as "authorized" or having "primacy." Although such decentralization may have benefits, it may also have costs when pollution crosses state borders. This paper estimates these costs empirically by studying the free riding of states authorized under the Clean Water Act. The analysis examines water quality in rivers around the US and includes fixed effects for the location where water quality is monitored to address unobserved geographic heterogeneity. The estimated equations suggest that free riding gives rise to a 4% degradation of water quality downstream of authorized states, with an environmental cost downstream of $17 million annually. (c) 2004 Published by Elsevier Inc. |
Agricultural water nonpoint pollution control under uncertainty and climate variability (2005) 🗎🗎 | The objective of this paper is to study the probabilistic cost-effectiveness of the farm management practices supported by the European Union for reducing nitrate pollution. Our method consists in using a bio-physical model to evaluate the environmental and economic impacts of various scenarios characterized by a set of farm practices. The cost-effectiveness of each scenario is calculated for a catchment area located in the northeast of France, for various climatic years and under different assumptions of crop prices. The results show that it is not realistic to obtain a rapid reduction of nitrate concentrations by implementing the scenarios tested. In the long run and irrespective of the economic context simulated, the optimum scenario in the case studied is one that combines integrated fertilization with the introduction of catch crops. Our findings thus highlight the effectiveness of catch crops that are able to reduce variability of nitrate concentration and thus significantly reduce the risk of exceeding environmental constraints. They therefore provide some recommendations for policy-makers. (c) 2004 Elsevier B.V. All rights reserved. |
Combating moral hazard in agri-environmental schemes: a multiple-agent approach (2005) 🗎🗎 | We introduce uncertainty about farmer characteristics into the moral hazard problem facing a regulator offering agri-environmental contracts. Our model allows for a continuum of farmer compliance costs. For reasonable parameter values the model predicts high levels of cheating and intensive monitoring, contrary to the evidence. We therefore add variation in farmers' propensity to cheat, the regulator's assessment of which has a decisive effect on policy: if farmers are overwhelmingly honest then the regulator reduces monitoring and accepts that some dishonest farmers will escape undetected. Paradoxically, the total number of cheats may increase following an increase in the number of honest farmers. |
Policy design and conservation compliance on highly erodible lands (2005) 🗎🗎 | We develop a game-theoretic model of heterogeneous producers in order to identify the economic determinants of producer noncompliance with the conservation provisions of the United States Department of Agriculture (USDA) policy on highly erodible lands. We evaluate the policy effectiveness in inducing compliance and adoption of conservation practices. The current policy design creates economic incentives for all noncompliant producers to masquerade as adopters and to claim government payments for which they are not entitled. Both theoretical and empirical results indicate that the increased income transfers to agriculture enacted under the latest Farm Bill will increase producer compliance and conservation activity on highly erodible lands. |
Dynamic efficiency of soil erosion and phosphor reduction policies combining economic and biophysical models (2005) 🗎🗎 | In this paper, we propose the use of the metamodeling approach to determine the optimal intertemporal management of soil and phosphorus losses from agricultural land. This approach enables to find a common equilibrium of the economic and biophysical systems. In contrast to the existing literature, the model takes into account nonlinear biophysical relationships and land-use choices. As a solution to the mathematical problems arising from this complex setup, we propose and employ a modified Cobb Douglas function in the empirical part of the paper. Most importantly, we allow for the comparison of different soil erosion and phosphorus reduction policies. The results show that an indirect policy in the form of soil protection scores (SPS) is highly inefficient, while another indirect policy in the form of land-use taxes is nearly as efficient as a direct policy. (C) 2004 Elsevier B.V. All rights reserved. |
The methyl bromide ban: Economic impacts on the California strawberry industry (2005) 🗎🗎 | California strawberry production accounts for 18% of total methyl bromide use in U.S. agriculture. Under the Montreal Protocol, methyl bromide was slated to be banned in the United States in 2005. A critical use exemption was obtained for U.S. agriculture for 2005 and 2006, but the phaseout of methyl bromide continues. We examine the ban's effects on the California strawberry industry, and on individual production regions in the state. Under the most likely scenario, industry revenue will decline by 6-17% due to the ban. The effects will differ by region, due to seasonal differences in demand and production, and the possibility of increased foreign competition. |
The effect of socioeconomic factors on the adoption of best management practices in beef cattle production (2005) 🗎🗎 | Factors affecting cattle producers' adoption of best management practices (BMPs) are examined using probit analyses. Results show that in situations such as when the farm includes more enterprises, the farmer has had contact with Natural Resources Conservation Service personnel at least once within the past year, the farmer holds a college bachelor's degree, the percentage of income from beef cattle production is higher, or the operation includes hilly land, the likelihood of BMP adoption is greater. Having a greater number of other agricultural enterprises and having a greater percentage of income from the cattle operation were significant factors in the adoption of companion practices. Results of this study suggest changes in formulating future environmental policies associated with pasture-based beef cattle production. |
Economic and environmental analysis of buffer zones as an instrument to reduce ammonia loads to nature areas (2006) 🗎🗎 | In this paper, we present a Danish case study of the effectiveness and costs of protecting nitrogen poor nature areas vulnerable to ammonia eutrophication by appointing buffer zones around them. Buffer zones are found to be an important step towards sustainable co-existence of intensive livestock production and nature conservation when local sources are important contributors to eutrophication. Depending on the deposition patterns, buffer zones may be cost-effective compared to re-establishment of eutrophicated locations, but a need for further model analysis is also identified. (c) 2005 Elsevier Ltd. All rights reserved. |
Environmental conservation in agriculture: Land retirement vs. changing practices on working land (2006) 🗎🗎 | The study develops a conceptual framework for analyzing the allocation of conservation funds via selectively offering incentive payments to farmers for enrolling in one of two mutually exclusive agricultural conservation programs: retiring land from production or changing farming practices on land that remains in production. We investigate how the existence of a pre-fixed budget allocation between the programs affects the amounts of environmental benefits obtainable under alternative policy implementation schemes. The framework is applied to a major agricultural production region using field-scale data in conjunction with empirical models of land retirement and conservation tillage adoption, and a biophysical process simulation model for an array of environmental benefits. (c) 2006 Elsevier Inc. All rights reserved. |
The economics of manure utilization: Model and application (2006) 🗎🗎 | A model of manure utilization is developed and applied to four types of transportable manure. Model results highlight important response differences among manure types and generally illustrate the diseconomies of manure production. For example, as manure production increases, manure value decreases and excess phosphate applications increase, thereby increasing the potential for phosphorus runoff. Policy scenarios limiting the manure application rate reduce manure value and excess phosphate application. Increasing the ratio of land using manure increases manure value while reducing excess phosphate application. Buildup of soil nutrients reduces manure value, but either increases or decreases excess phosphate application depending on the scenario. |
Impact of water pollution on rural communities: An economic analysis (2006) 🗎🗎 | This paper assesses the economic costs of water pollution (industrial) in the rural communities in terms of losses to agricultural production, human health, and livestock. The cost estimates are based on the detailed primary (household level) data collected from an intensive study of two villages-one a pollution-affected village and another control (not affected by pollution)-located in one of the industrial belts in Andhra Pradesh, South India. The cost estimates revealed that the impact of industrial pollution on rural communities is quite substantial in monetary terms. The paper argues that the compensation principle might work if the estimates of damage are realistic. Further, mere passing of laws and creating institutional structures are necessary but not sufficient to address the environmental problems. Policies should be implemented in their right perspective. Institutions should be strong enough, with more autonomy and powers, to deal with the problems at hand. (c) 2005 Elsevier B.V. All rights reserved. |
No-till technology: benefits to farmers and the environment? Theoretical analysis and application to Finnish agriculture (2006) 🗎🗎 | We assess theoretically and empirically the private profitability and social desirability of conventional tillage and no-till when crop yields, production costs and nutrient and herbicide runoff damages are taken into account. Based on Finnish experimental data, no-till provides higher social and private profit than conventional tillage for barley but not for oats and wheat, for which the production cost advantage of no-till does not compensate for lower yields in the private optimum. As regards social returns, no-till provides slightly better overall environmental performance but, given the existing valuation of nutrient and herbicide runoff damage, this is not enough to give no-till an advantage in oats and wheat cultivation. Thus, the key factors determining the private and social profitability of no-till and conventional tillage are yields and production costs rather than environmental performance. |
Missing the boat: Midwest farm drainage and Gulf of Mexico hypoxia (2006) 🗎🗎 | Research addressing Gulf hypoxia has failed to account for agricultural drainage, the major pathway of nitrate loads in Upper Midwest states. Focusing on two Minnesota watersheds, simulation results were combined with a constrained-optimization model to evaluate the cost-effectiveness of nitrogen-abatement policies, with explicit focus on drainage. Results indicate that drained land dominates in nitrogsen abatement, and has substantially lower abatement costs relative to nondrained land. However, policies that remove drainage were not cost-effective. Further, it was found that nutrient management, a policy strongly recommended by prior research, is relatively cost-ineffective as a means of abatement on non-drained land. |
Environmental policy uncertainty and marketable permit systems: The Dutch Phosphate Quota Program (2006) 🗎🗎 | Tradable permits are generally considered as an efficient instrument to regulate pollution by individual producers. However, uncertainty about changes in or possible discontinuation of the program could make individual farmers reluctant to invest in tradable permits. This article uses the option approach to derive a theoretical model that shows the impact of policy uncertainty on investment in tradable quota. The empirical assessment provides weak evidence for the existence of option values due to policy uncertainty for phosphate quota in swine production in the Netherlands. |
Abatement costs for agricultural nitrogen and phosphorus loads: a case study of crop farming in south-western Finland (2006) 🗎🗎 | Designing efficient agri-environmental policies for agricultural nutrient load reductions calls for information on the costs of emission reduction measures. This study develops an empirical framework for estimating abatement costs for nutrient loading from agricultural land. Nitrogen abatement costs and the phosphorus load reductions associated with nitrogen abatement are derived for crop farming in south-western Finland. The model is used to evaluate the effect of the Common Agricultural Policy reform currently underway on nutrient abatement costs. Results indicate that an efficiently designed policy aimed at a 50% reduction in agricultural nitrogen load would cost EURO 48 to EURO 35 million, or EURO 3756 to EURO 2752 per farm. |
Shadow prices and pollution costs in US agriculture (2006) 🗎🗎 | We use the directional output distance function to derive estimates of production inefficiency, shadow prices for polluting outputs, and the associated pollution costs. Using a quadratic functional form for the directional output distance function and data for the U.S. agricultural sector during 1960-1996, we find that the pollution costs (the shadow values) from the runoff and leaching of pesticides are 6% of crop and animal revenues and are highest in the Midwest and lowest in the Western states. If states were to reduce technical inefficiency and operate on the production frontier, pollution costs could be reduced by 7%. (c) 2005 Elsevier B.V. All rights reserved. |
CAP MTR versus environmentally targeted agricultural policy in marginal arable areas: impact analysis combining simulation and survey data (2006) 🗎🗎 | On June 2003 the final version of the Common Agricultural Policy Mid-Term Review (CAP MTR) was published. The driving forces of this policy change include inter alia the compliance with World Trade Organization (WTO) negotiations' requirements, improvement of social support for agricultural policy, adjustment to budget constraints and adaptation of agricultural practices to environmental requirements. This article reviews how this policy performs in marginal areas regarding one of those objectives: the provision of environmental outputs related to agricultural activity. As an alternative to this reform, a policy based on agri-environmental measures designed to maximize environmental outputs, is proposed. Both options are evaluated from a cost-effectiveness point of view. Data from a farm survey and a positive mathematical programming model for a cereal steppes agro-system in Spain are combined in order to simulate the effects of this reform and our alternative instrument on several environmental indicators. Results show that in marginal areas, where land abandonment is a clear threat, more environmental output can be achieved for the same cost, while maintaining, if not increasing, the levels of achievement for the other goals. |
We use a mechanism design framework to analyze the optimal design of green payment policies with the dual goals of conservation and income support for small farms. Each farm is characterized by two dimensions of attributes: farms size and conservation efficiency. The policymaker may not be able to use the attributes as an explicit criterion for payments. We characterize optimal policy when conservation efficiency is unobservable to policymakers, and when farm size is also unobservable. An income support goal is shown to reduce the conservation distortion caused by asymmetric information. The cost of optimal green payment mechanisms is shown to depend crucially on whether large or small farms have greater conservation efficiency. (C) 2007 Elsevier Inc. All rights reserved. | |
The value of the reservoir services gained with soil conservation (2007) 🗎🗎 | To evaluate the impact of soil conservation on reservoir services, we extend replacement cost theory to cases where reservoir benefits are restored or preserved for multiple years. The framework is used to value the effect that a marginal change in soil erosion has on current and future reservoir benefits. Results show that, across the 2, 111 U. S watersheds, a one-ton reduction in soil erosion provides benefits ranging from zero to $1.38. Furthermore, in a policy application, the lower soil erosion level in 1997, relative to 1982, was shown to have conserved $154 million in reservoir benefits. |
Agency perceptions of alternative salinity policies: The role of fairness (2007) 🗎🗎 | This study examined the relationship between agency staff preferences for salinity policies and perceptions of'farmer cost, farmer resistance, effectiveness in salinity reduction, fairness, and administrative costs. A mail survey was conducted in Western Australia and structural equation modeling was used to examine the relationships between perceived policy attributes. As expected, fairness had a direct and significant effect on policy preference and also affected administrative costs, which in turn had a direct effect on policy preference. In the final model there was no direct effect between farmer costs and policy preferences. |
Multiple environmental externalities and manure management policy (2007) 🗎🗎 | This paper considers the economic and environmental implications of regulating water and air nitrogen emissions under single and multi-environmental media policies in the U.S. hog industry. We examine tradeoffs from policies designed to correct an externality in one medium, when there are multiple environmental externalities. We separately and jointly analyze: (a) nitrogen land application restrictions consistent with recently adopted EPA requirements under the Clean Water Act, and (b) hypothetical air quality restrictions under the Clean Air Act, both with and without EQIP payments available to mitigate the costs of complying with nutrient application regulations. |
A mathematical approach to comparing environmental and economic goals in dairy farming: Identifying strategic development options (2007) 🗎🗎 | Instead of continuously adapting current dairy farming systems according to the ruling legal instruments, exploring strategic development options for the farming system with a focus on the final environmental goals may provide better perspectives for farm continuation. To identify promising options, the dairy farming model was developed. The model describes options of different intensities for producing feed in the field, for processing or buying feed and for converting feed into milk. The combinations of different intensities result in different types of income levels, different nutrient emissions into the ecosystem and different abilities to manage the landscape. The model reconciles economic objectives (maximizing income per ha) with ecological objectives (minimizing nutrient leakages and maximizing landscape values). The multiple-objective model is in turn fed by other models, such as technical coefficient generators for grass, maize and fodder beets. The dairy farming model is applied to assess the type of farming systems that meet environmental policy objectives and analyse the perspectives of dairy farming on sandy soils in the Netherlands. It is shown that many different dairy farming systems are possible meeting the environmental goals (maximum 34 kg N leached, 30 kg N volatilized and a P surplus below 2.2 kg ha(-1)), with a range in environmental and economic performance. The scenario selected depends on the preference of the stakeholder. General characteristics are low N application rates on grazed grassland, associated with the restriction on nitrate leaching, animals housed in lowemission stables, associated with the restriction on ammonia volatilization, and a substantial part of the concentrates produced in the region, associated with the restriction on P surplus. Production and utilization of hay is an option to reduce N excretion by the animals. Regional or on-farm concentrate production is economically only attractive if land is in surplus under pressure of environmental goals. (C) 2006 Elsevier Ltd. All rights reserved. |
Analysis of nitrate pollution control policies in the irrigated agriculture of Apulia Region (Southern Italy): A bio-economic modelling approach (2007) 🗎🗎 | Nitrate leaching is one of the many forms of environmental pollution resulting from irrigation and intensive agriculture. In this work, a method of combining an agronomic simulation model (EPIC) and a mathematical multi-objective programming model is used to analyse the effects of three agricultural policies on farmer's revenue and nitrate leaching. An evaluation of the net social costs associated with the different policy measures is also given. The farmer's behaviour in different policy scenarios was studied in terms of selected crops, irrigation technique and method, and adopted management practices with focus on farm management practices and water application efficiency. Irrigation water pricing, subsidies to adopt improved management levels, and taxation on the use of nitrogen fertilizer were examined. A trade-off emerges between the levels of nitrate leaching and net farmer's revenue more pronounced for nitrogen tax policies than for water pricing. The results obtained indicate that nitrate leaching can be reduced by about 40% with an associated net social cost of 269 epsilon/ha for the water pricing policy, 183 epsilon/ha for the tax on fertilizer and 95 epsilon/ha for subsidies to high efficiency management. (C) 2006 Elsevier Ltd. All rights reserved. |
The environmental impact of European farming: How legitimate are agri-environmental payments? (2007) 🗎🗎 | Offering agri-environmental payments to address the various positive and negative environmental nonmarket effects of European Union agriculture might be an efficient way of dealing with market imperfections. However, the complex interaction between farming practices and agri-environmental effects makes it difficult to assess what level of payments is justified under World Trade Organization's Green Box provisions. In reviewing the literature on positive and negative externalities of European farming on the environment, we find evidence to suggest that paying for agri-environmental improvements may be appropriate under the Green Box provisions, even if the payments have a positive production effect. |
Co-ordinated environmental regulation: controlling non-point nitrate pollution while maintaining river flows (2007) 🗎🗎 | Environmental policy often addresses multiple targets, yet much economic analysis of pollution control is based on a single-target objective. In this paper, we present an analysis of policies to control non-point source nitrate pollution in the presence of minimum river flow restrictions. A non-linear bio-physical economic optimisation model of an intensively cultivated Scottish agricultural catchment was constructed. The presence of minimum river flow controls in the catchment was found to reduce nitrogen pollution. However, by themselves, river flow controls were found not to be a cost effective means to reduce non-point pollution. We quantify the improved social welfare from coordinating the environmental regulation of river flows and pollution, and determine the conditions under which such coordination is beneficial. The paper also investigates whether the benefits of such coordination can be sustained under wetter (winter) weather conditions implied by current climate change predictions. |
Farmers' costs of environmental regulation: Reducing the consumption of nitrogen in citrus farming (2007) 🗎🗎 | Environmental externalities in agriculture, and the choice of suitable instruments to integrate environmental concerns into agricultural policies, are a matter of interest for the Common Agricultural Policy. In this paper, we use Data Envelopment Analysis techniques to assess the impact on farms' performance of two environmentally friendly regulations aimed at abating consumption of inorganic nitrogen in Spanish citrus farming: levies on purchased nitrogen and nitrogen use permits for farms. By comparing farms' short-run maximum profits under both unregulated and regulated scenarios a regulation cost index is computed. Our results show that nitrogen overuse is mostly a matter of management inefficiency and that pollution could be reduced by promoting best farming techniques. Instead, if environmental regulations are implemented, regulating authorities should be aware that quantitative limits exercise a lower impact on farms' profits than taxes. (c) 2006 Elsevier B.V. All rights reserved. |
Efficient management of eutrophic coastal zones in theory and practice: an application on nitrogen reduction to the Stockholm archipelago (2007) 🗎🗎 | This study estimates efficient nitrogen load reductions to the Stockholm archipelago, a Swedish coastal zone in the Baltic Sea, and compares these with politically determined and implemented nitrogen abatement programs. The region is relatively well equipped with necessary data, and a simple programming model is constructed. The results show a large divergence in efficient nitrogen reductions, mainly due to the divergences in benefit estimates from water quality improvements in the archipelago. However, the results need to be interpreted with caution due to all uncertainties related to predicting net values from changes in nitrogen load to a coastal zone. In spite of this, it is still of policy relevance to infer results which show that the politically determined target coincides with an efficient nitrogen reduction at relatively low benefit estimate, but that actual net benefits could be increased from a reallocation of abatement measures towards more low cost measures. |
Phasing out of environmentally harmful subsidies: Consequences of the 2003 CAP reform (2007) 🗎🗎 | Subsidies linked to production have been classified as environmentally harmful by the OECD. A core element of the EU 2003 Common Agricultural Policy (CAP) reform is to decouple income support from production. This paper estimates the environmental consequences of this policy reform. An agricultural sector model using a modified version of the positive mathematical programming method depicts the complex natural, structural, and political relationships of Austrian farming. Changes in management measures can be analyzed with respect to their environmental effects by using appropriate indicators. Simulation results show that the 2003 CAP reform will reduce the average cost of production, and may improve environmental conditions regarding soil, water, and greenhouse gases when compared to a scenario without reform. Thus, the new CAP is likely to bring about outcomes which the previous reform (Agenda 2000) promised but did not deliver. (c) 2006 Elsevier B.V. All rights reserved. |
Demand for public landscape management services: Collective choice-based evidence from Swiss cantons (2007) 🗎🗎 | While budgets for agri-environmental policy in OECD countries are rapidly increasing with current policy reforms, information about the locally varying demands for policies implemented at various levels of government remains scarce. In this study, a median voter framework is used to analyse the demand for landscape management services based on the expenditures of sub-federal governments for two decentralized landscape management programmes in Switzerland. Furthermore, based on the expenditures for one cantonal and one national agri-environmental scheme, it is determined whether the cantonal scheme resulted in a more demand-oriented pattern of expenditures than the national scheme. The median voter model estimates suggest a high-income elasticity and a low-price elasticity of demand for landscape management services. Contrary to expectations, both the cantonal and national expenditures significantly reflected cantonal variations in proxies of the demand for landscape management services. (c) 2006 Elsevier Ltd. All rights reserved. |
On the choice of farm management practices after the reform of the Common Agricultural Policy in 2003 (2007) 🗎🗎 | The Common Agricultural Policy (CAP) was fundamentally reformed in 2003. From 2005, farmers will receive decoupled income support payments instead of production premiums if basic standards for environment, food safety, animal health and welfare are met. Farmers are likely to adjust production and management practices to the new policy framework. We describe how this reform fits into the EU strategy of making agricultural production more environmentally friendly by concentrating on the financial aspects of the reforms. Using an agricultural sector model for Austria, we show that the reform will further decrease agricultural outputs, reduce farm inputs, lessen nitrogen surpluses and make environmentally friendly management practices more attractive for farmers. (c) 2006 Elsevier Ltd. All rights reserved. |
Economic and environmental performance of alternative policy measures to reduce nutrient surpluses in Finnish agriculture (2007) 🗎🗎 | This paper provides an economic sector level analysis of the effectiveness of different policy measures in decreasing nitrogen (N) and phosphorus (P) surpluses from agriculture in order to reduce nutrient runoff from agricultural fields to watercourses and to improve water quality of surface waters. Assuming no changes in the EU level policies after CAP reform 2003 we focus on national level policy measures such as full or partial de-coupling of national support from production, payments for reduced nutrient surpluses of N and P, and N fertiliser tax. None of the analysed policy measures is superior one with respect to environmental performance, since full decoupling of national support would be the most effective in reducing P surpluses while payment for reduced nutrient surplus performed best with respect to N surpluses. Economic performance (farmers' compliance cost per %-reduction of N or P surplus) of full and partial de-coupling of national support is clearly better than that of specialised agri-environmental policy instruments, because both decoupling scenarios result in the increase of farmers' income in comparison to base scenario, and thus compliance costs are in fact negative in these two cases. Our analysis confirms the fact that the overall policy package matters a lot for the effectiveness of agri-environmental policy measures. Environmental performance of agri-environmental policy measures may be significantly reduced, if they are implemented jointly with production coupled income support policies. Thus, in order to increase the effectiveness of agri-environmental policy measures agricultural income support policies should be decoupled from production and this alone would bring substantial reduction in nutrient surpluses. |
Poverty, risk, and the supply of soil carbon sequestration (2008) 🗎🗎 | We explore poor farmers' incentives to adopt production systems that increase soil carbon sequestration, focusing on the impact of risk. A dynamic optimization model of conservation agriculture adoption is presented, where farmers optimize over expected utility of profits from agriculture and carbon sequestration. Adoption impacts on agricultural productivity are modeled as a combination of the technological effects of the new system, and productivity effects of changes in soil carbon on agricultural output. Comparative static results indicate increases in soil carbon sequestration price and the discount rate have unambiguous impacts on equilibrium soil carbon levels; the former leading to higher, and the latter to lower, carbon levels. Increases in the price of agricultural output and risk aversion have ambiguous impacts, depending on the relative strength of the productivity and technology effects. The paper concludes with a discussion of designing soil carbon payment mechanisms to benefit low income farmers. |
Pesticides, preference heterogeneity and environmental taxes (2008) 🗎🗎 | In this paper we present results from two choice experiments (CE), designed to take account of the different negative externalities associated with pesticide use in agricultural production. For cereal production, the most probable impact of pesticide use is a reduction in environmental quality. For fruit and vegetable production, the negative externality is on consumer health. Using latent class models we find evidence of the presence of preference heterogeneity in addition to reasonably high willingness to pay (WTP) estimates for a reduction in the use of pesticides for both environmental quality and consumer health. To place our WTP estimates in a policy context we convert them into an equivalent pesticide tax by type of externality. Our tax estimates suggest that pesticide taxes based on the primary externality resulting from a particular mode of agricultural production are a credible policy option that warrants further consideration. |
Welfare impacts of alternative public policies for agricultural pollution control in an open economy: A general equilibrium framework (2008) 🗎🗎 | A general equilibrium approach is used to evaluate the welfare impacts of alternative policies for reducing agricultural pollution in an open economy with preexisting distortions caused by income taxes and agricultural subsidies. The policies examined here include the removal of distortionary agricultural subsidies. We find that even though these distortions are small compared to others in the economy, removing them and imposing nitrogen reduction subsidies and/or output taxes can enhance welfare and reduce nitrogen pollution; thereby leading to a substantial double dividend. The relative efficiency of the alternative policies examined here depends on the level of the nitrogen reduction target. |
Scoring two-dimensional bids: how cost-effective are agri-environmental auctions? (2008) 🗎🗎 | This paper analyses the cost-effectiveness of agri-environmental auctions that solicit two-dimensional bids consisting of conservation activity and compensation payment. Taking a self-selecting contract schedule as a benchmark, an optimally designed auction has the potential to reduce government expenditure significantly. However, the relative cost-effectiveness of a multi-dimensional auction is determined by the bid scoring system and farmers' expectations of the maximum acceptable bid score. The article elaborates conditions for a bid scoring rule that optimises cost-effectiveness and tests how benefits of an auction approach may be eroded if farmers' expectations of the maximum acceptable bid score diverge from the level consistent with this optimum. |
Agri-environmental contracting of Dutch dairy farms: the role of manure policies and the occurrence of lock-in (2008) 🗎🗎 | The paper examines the possibility of lock-in on the area contracted under an agri-environmental contract in Dutch dairy farming, using a mathematical programming model, and the interaction of these contracts with Dutch national manure policy. Stricter manure policies increase contract participation, since more restrictive N application standards lower the opportunity cost of contracting. If contract payments are halved in a later period, 95 per cent of the contracting farms in the model would like to alter their contracting decision but they do not because of the cost of grassland renewal (switching cost). These farms are locked-in. The model incorporates time, transaction cost and technical and institutional constraints. |
Stringency of environmental targets in animal agriculture: shedding light on policy with shadow prices (2008) 🗎🗎 | We present a framework for deriving shadow prices for regulations on manure-spreading in animal agriculture and demonstrate that these prices can be used as indicators of the stringency of environmental regulation. We illustrate our approach with the case of water protection measures implemented in Finland to restrict the use of phosphorus on livestock farms. The estimated shadow price of the nutrient limit lies in the range (sic)60-125 per kilogram of bioavailable phosphorus in manure, assuming that output reduction is the only option for decreasing the amount of manure in manure-dense areas. However, instead of cutting output, farms may be able to avoid these high abatement costs by more efficient input use or alternative abatement methods. |
Agricultural multifunctionality promoting policies and the safeguarding of rural landscapes: How to evaluate the link? (2008) 🗎🗎 | This paper aims to question the rationale for choosing agricultural subsidies as efficient incentive mechanisms for the provision of environmental services by agriculture with a special emphasis on rural landscapes. We emphasise the need to resort to both the demand side and supply side aspects of agricultural multifunctionality. First, we underline the importance of resorting to the concept of jointness when analysing the conditions in which the provision of environmental services by rural landscapes is achieved as well as the operational limits of such a concept. Second, we analyse the difficulties that the evaluation of social demand for the rural landscapes which are associated with agricultural activities brings about. In particular, the problems for quantifying the economic values that are attached to the spatial attributes of these landscapes are mentioned. |
Agri-environmental policies in the EU and United States: A comparison (2008) 🗎🗎 | Agri-environmental policies (AEPs) in the United States and the European Union are examples of payments for environmental services that pay farmers to reduce the negative externalities of agricultural production, while serving as a means to transfer public funds to farmers. We show that despite similar origins, AEPs in the two regions differ both in their specific objectives and in their implementation. For example, AEPs in most member states of the EU-15 have the additional objective of using agriculture as a driver for rural development. This objective is achieved by compensating farmers for the private delivery of positive public goods, such as attractive landscapes, produced by agriculture. The rationale is market failure, and there is empirical evidence that Europeans are willing to pay for such positive externalities. No comparable provision exists in U.S. policy. By contrast, U.S. AEPs focus almost entirely on reducing agriculture's negative externalities, such as soil erosion. Second, we find that U.S. programs are more targeted than their EU counterparts, and take opportunity cost into account. The EU programs, on the other hand, address a wider range of externalities, and are focused more on the paying for a particular farming process than reducing specific negative externalities. The EU takes a broader view of AEPs than does the United States, both in terms of type of activity that can be funded, and by using less targeting by land characteristics, and so the European program could be more easily used as a mechanism for transferring income to producers. Despite this, we find evidence that many of the amenities targeted by the programs are demanded by the population. (C) 2007 Elsevier B.V. All rights reserved. |
Voting for environmental policy under income and preference heterogeneity (2008) 🗎🗎 | We examine the design of policies for promoting the consumption of green products under preference and income heterogeneity using organic food as an example. Two instruments are considered: a price subsidy for organic food products and a tax on conventional products. When the income differences and social benefits of organic farming are large, these factors dominate in shaping the policy preferences of the majority. In this case, the environmental policies preferred by the majority tend to be stricter than socially optimal policies. However, when income differences are small, policy preferences are more directly determined by tastes for organic products and the majority may prefer no intervention. |
Optimal management of a eutrophied coastal ecosystem: balancing agricultural and municipal abatement measures (2008) 🗎🗎 | Agriculture and municipal wastewater are the principal sources of eutrophying nutrients in many water ecosystems. We develop a model which considers the characteristics of agricultural and municipal nutrient abatement. The model explicitly accounts for the investment needed to set up wastewater treatment facilities, and makes it possible to determine the optimal timing of investment as well as the optimal agricultural and municipal abatement levels. We apply the model to the Finnish coastal waters of the Gulf of Finland. Our results indicate that substantial savings in abatement costs and the damage associated with eutrophication could be obtained by constructing the facilities needed to process all the wastewaters entering the coastal ecosystem. The optimal timing of investment is shown to hinge on both the economic and ecological characteristics of the ecosystem. |
Policy-related transaction costs of agricultural policies in Finland (2008) 🗎🗎 | This paper assesses policy-related transaction costs (PRTC) associated with the main agricultural and agri-environmental policy instruments in Finland. We find that area-based income Support measures entail low transaction costs as expressed in percent of payments, not only in Finland but also in other European countries. Moreover, transaction costs in the Finnish agri-environmental programme are surprisingly low. Within the agri-environmental programme, transaction costs increase with more targeted and differentiated agri-environmental measures. I-or the basic mandatory measures, these costs arc even lower than the transaction costs for the area-based income support measures. What regards the most differentiated policy measures such as conservation of special biotopes or establishment of riparian buffer zones, transaction costs increase considerably. Combining these findings with the actual targets of the Finnish agricultural policies provides indirect evidence about the impacts of policy instruments and the efficiency of administration in implementing the instruments. For area-based income support measures, the Finnish administration seems to work very efficiently. For water protection targets, enforcement and division of labour within the administration seem to be insufficient. |
Spatial Externalities in Agriculture: Empirical Analysis, Statistical Identification, and Policy Implications (2008) 🗎🗎 | Spatial externalities can affect economic welfare and landscape pattern by linking farm returns oil adjoining parcels of land. While policy can be informed by research that documents spatial externalities, statistically quantifying the presence of externalities from landscape pattern is insufficient for policy guidance unless the underlying cause of the externality can be identified as positive or negative. This article provides a springboard for empirical research by examining the underlying structure, social-environmental interactions, and statistical identification strategies for the analysis and the quantification of agricultural spatial externalities that are derived from observations of landscape change. The potential for original policy treatments of agricultural spatial externalities in development and environment outcomes is highlighted. (C) 2008 Elsevier Ltd. All rights reserved. |
Bioenergy crop production and climate policies: a von Thunen model and the case of reed canary grass in Finland (2008) 🗎🗎 | We examine the potential of bioenergy crops to offset greenhouse gas emissions from fossil fuels, assuming homogeneous agricultural land and distance-dependent transport costs. Variable transport costs define the socially and privately optimal extensive margin of the bioenergy crop production and imply that fertiliser intensity differs across locations. Under current policy, private fertiliser application is suboptimal, requiring location-specific input, transport or output subsidies. The theoretical model is applied to reed canary grass (Phalaris arundinacea L.) in Finland, which offsets emissions from peat in electricity production. If oats is the alternative crop, and taking permit price of CO2 emissions as the proxy for climate benefits over the life cycle, reed canary grass production is socially optimal even 100 km away from the power plant and still offsets more than 6 tons/ha of CO2 emissions from peat. |
Analysis of policy instruments for control of nitrate pollution in irrigated agriculture in Castilla y Leon, Spain (2009) 🗎🗎 | Irrigated agriculture is one of the most important sources of nitrate pollution of water resources. For this reason, during the past decade, various policies have been proposed in order to prevent this negative impact of farming activities. The aim of this work is therefore to analyze the effects of the joint application of the last Common Agriculture Policy (CAP) reform with different policy instruments designed to mitigate nitrate pollution. To this end, models based on Positive Mathematical Programming have been developed to enable simulating irrigators' productive behaviour in the event of the implementation of these instruments. The results indicate that the latest CAP reform (partial decoupling of subsidies) will by itself lead to an important reduction in nitrate pollution. If this reduction is not regarded as being sufficient, other specific policy instruments could further reduce this source of pollution. In this sense, the most suitable one could be the application of nitrogen fertilization quotas. |
The scope for regulatory incentives to encourage increased efficiency of input use by farmers (2009) 🗎🗎 | Managing diffuse water pollution from agricultural land continues to be one of the more intractable challenges for environmental policy. The advent of the Water Framework Directive places the onus on EU member states to identify reasons why water bodies fail or arc at risk of failure to meet good ecological status. In such cases, programmes of measures are to be enacted to mitigate the causes at least cost. Failing this, users may ultimately be faced with the full costs of pollution. This paper considers the scope for measures that address nitrogen and phosphorus pollution at source. Specifically the paper relates the diffuse pollution problem to the extent of over application of nitrogen and phosphorus. Data envelopment analysis applied to English cereal and dairy farmers, provides an indication of resource use and evidence of over application. This inefficiency provides a potential basis for either a least cost abatement approach using effective information and advice, or alternatively a pollution charge. (C) 2008 Elsevier Ltd. All rights reserved. |
Modelling Farmers' Participation in an Agri-environmental Scheme using Panel Data: An Application to the Rural Environment Protection Scheme in Ireland (2009) 🗎🗎 | Previous studies that have attempted to model the participation decision of farmers in agri-environmental schemes have used a static framework where it was not possible to examine changes in the participation decision of farmers over time. This is rectified in this paper by utilising an 11-year panel that contains information on 300 farmers for each year. The structure of this dataset allows us to employ discrete time duration random effects panel data logit models to model the determinants of entering the Irish Rural Environment Protection Scheme (REPS). We introduce a dynamic element into a number of the models by using the random effects logit model estimator, with lagged dependent variables as additional explanatory variables. The results point to the fact that systems of farming that are more extensive and less environmentally degrading remain those most likely to participate in the REPS. In addition, the results highlight the fact that where no attempt is made to control for unobserved heterogeneity or path dependency the effects of the farm- and farmer-specific characteristics may be overestimated. |
Modelling farm structural change for integrated ex-ante assessment: review of methods and determinants (2009) 🗎🗎 | This paper provides a literature review of methods and determinants relevant for modelling farm structural change within an integrated modelling chain. Environmental and economic impacts at farm level and individual farm responses to agricultural and agri-environmental policies strongly depend on characteristics like farm size, specialisation, and production intensity. Consequently, up-scaling results of corresponding farm type models in ex-ante assessment exercises requires comprehensive and valid predictions of the farm types' future relevance under different scenarios. The paper reviews methods relevant to forecasting farm numbers in classes defined by farm typologies with the objective to identify (1) a preferable modelling approach and (2) empirically relevant determinants. Despite the literature's considerable size, even recent studies are rather limited in scope and typically restricted to a subset of farm types and one or very few regions. With regard to data availability, computational complexity and statistical validation procedures, Markov chain models are identified as the only generally suitable method for a broadly scoped modelling approach across European regions and a differentiated farm typology. However, other research on determinants of farm growth, the number of farm holders, farm succession as well as new multi-agent based simulation approaches hint at relevant explanatory variables previously not considered in Markov chain analyses. Their impact seems testable in more ambitious cross-regional and cross-farm type setups. (C) 2009 Elsevier Ltd. All rights reserved. |
Emission trading in agriculture: a study of design options using an agent-based approach (2009) 🗎🗎 | The Scottish Government has proposed reducing Scotland's greenhouse gas (GHG) emissions by at least 80% by 2050, compared to the 1990 baseline level. It is not yet clear how these reductions will be achieved, but it is likely that all sectors will be expected to make some contribution. Depending on their farm activities, farmers have different sets of abatement alternatives-the challenge facing them, however, is in finding strategies that help to meet reduction targets while maintaining their income. In this paper, we use an agent-based modelling approach to study the implications of carbon trading design options aimed at reducing GHG emissions in the agricultural sector, such as auctions, fixed carbon prices, or carbon credit banking. The feasibility of carbon trading scheme options is assessed regarding their ability to ensure that farmers obtain carbon credits at an affordable and adequate price, since low prices would reward farmers not adopting on-farm abatement options and high prices would encourage non-compliance to targets, thus increasing enforcement costs. Assuming a closed market within the agricultural sector, this study shows that farmers may face up to 50% loss of income to achieve a 30% reduction target if this requires a cut in production. However, market design options such as credits banking may allow farmers to progressively adapt to the scheme constraints. At an individual level, the rate of on-farm compliance and the mandated emission reduction target will determine which farmer strategy is the most efficient to cope with a trading scheme. |
Land Heterogeneity, Agricultural Income Forgone and Environmental Benefit: An Assessment of Incentive Compatibility Problems in Environmental Stewardship Schemes (2009) 🗎🗎 | This paper examines the issue of incentive compatibility within environmental stewardship schemes, where incentive payments to farmers to provide environmental goods and services are based on foregone agricultural income. The particular focus of the paper is land heterogeneity, either of agricultural or environmental value, leading to divergence between the actual and socially optimal level of provision of environmental goods and services. Given land heterogeneity, such goods and services are likely to be systematically over- or under-provided in response to a flat rate payment for income foregone. |
Distinguishing between Whole-Farm vs. Partial-Farm Participation in the Conservation Reserve Program (2009) 🗎🗎 | By distinguishing between the decision to participate in the conservation reserve program (CRP) and the decision for whole-farm vs. part-farm participation, we model participation as separate binary decisions. Our results suggest the farm characteristics and other factors affect the decision to participate in CRP differently than the decision regarding whole-farm vs. part-farm participation. This model formulation also helps to clarify the conditions under which the effect of CRP payments on the acreage enrolled in the program is positive or negative. (JEL Q15, Q18) |
Economic and environmental impact of the CAP mid-term review on arable crop farming in South-western France (2009) 🗎🗎 | The issue addressed in this paper is whether implementation of the CAP MTR, (involving decoupled payments reduced by "modulations" and subject to cross-compliance measures) can be effective in improving the environmental impact of arable farming. The focus is on two French cross-compliance measures (compulsory buffer strips along rivers and crop diversity). A farm-level bio-economic model incorporating yield uncertainty is built and adjusted to represent two typical arable farms in the Southwest of France. The model also combines agro-environmental indicators. The results indicate that a simple decoupling of direct payments, without cross-compliance measures, has no impact on allocations between different crops. If cross-compliance measures are imposed, a small reduction in the cultivated area of irrigated crops is observed. The penalty levied (1% of the total subsidy paid) when farmers do not comply with the "buffer strips" requirement is sufficient for both farm-types. Decoupling and modulation result in a fall in the total gross margin of around 3%, principally because of the 5% modulation rate, while the "buffer strips" requirement leads to a further decrease of around 1%. Moreover, this requirement improves the environmental indicators at the farm level. (C) 2008 Elsevier B.V. All rights reserved. |
Threshold effect and co-ordination of agri-environmental efforts (2009) 🗎🗎 | This paper deals with policy mechanism designs for agri-environmental schemes when the bio-physical processes are characterised by threshold effects. There is a threshold effect when specified farming practices must be applied on a minimal share of an area of interest to trigger perceptible changes of the state of the natural environment. Schemes result in a pure economic loss if the induced agri-environmental efforts are not sufficient. Different situations are considered, including the lack of information on farmers' characteristics or actions, uncertainty on the relationship between farming practices and environmental quality, and combined difficulties of scheme design. |
Conservation Payments, Liquidity Constraints, and Off-Farm Labor: Impact of the Grain-for-Green Program on Rural Households in China (2009) 🗎🗎 | This study evaluates the labor response of rural households participating in the Grain-for-Green program in China, the largest payments for ecosystem services program in the developing world. Using a panel data set that we designed and implemented, we find that the participating households are increasingly shifting their labor endowment from on-farm work to the off-farm labor market. However, the effects vary depending on the initial level of human and physical capital. The results support the view that one reason why the participants are more likely to find off-farm employment is because the program is relaxing households' liquidity constraints. |
The Common Agricultural Policy is modelled as a club good providing the European Union (EU) farmer with financial benefits. We build an economic model which explains how much farmers in individual EU countries invest in rent-seeking activities in order to test for free-riding behaviour on lobbying costs. For our investigation we group the EU member countries by farm structure, and the type of benefit received. We explain the fees paid by farmers for lobbying by other countries' fees, political variables, and country and regional agricultural characteristics. The model shows that some member countries free ride on others suggesting a form of policy path dependency. | |
The national and regional impacts of direct payments modulation in the Czech Republic (2009) 🗎🗎 | This paper addresses (ex ante) the issue of the potential impact of the modulation of direct payments on a sector and regional scale in the Czech Republic. The ultimate version of the compulsory modulation measure adopted under the Health Check of the Common Agricultural Policy (CAP) assumes the reduction of direct payments if the total individual claim exceeds 5 thousand (sic) or 300 thousand (sic) level. The Czech agricultural sector will be impacted by this measure substantially, given the large scale farming enterprises. In 2013, the total farmers' direct payments will be cut by more than 10% ((sic) 91 million). Moreover, there are regional differences in farm structures (the average farm size and the extent of collectivization) which will bring about various effects of policies in the heterogeneous regions. The analysis further shows that the regions that are least affected are at the same time more environmental sensitive and are mostly situated in the mountainous or sub-mountainous parts of the country or more urban areas than the average. Hence the effect of the modulation, from a purely environmental perspective, may not contradict the objectives of other environmental policies. That is to say the regions that need support the most will be reduced the least. However, the picture is less obvious in the regional economies where more rural regions (potentially more vulnerable with socio-economic problems) tend to be more affected. |
Evaluating the effects of farm programmes: results from propensity score matching (2009) 🗎🗎 | The paper applies a semi-parametric propensity score matching approach to evaluate the effects of agri-environment (AE) programmes on input use and farm output of individual farms in Germany. The analysis reveals a positive and significant treatment effect of AE programmes on the area under cultivation, in particular grassland, resulting in a decrease of cattle livestock densities. Furthermore, participation significantly reduced the purchase of farm chemicals (fertiliser, pesticide). We also find differences in the treatment effect among individual farms (heterogeneous treatment effects). Farms that can generate the largest benefit from the programme are most likely to participate. |
An integrated simulation model to evaluate national measures for the abatement of agricultural nutrients in the Baltic Sea (2009) 🗎🗎 | This study introduces a prototype model for evaluating measures to abate agricultural nutrients in the Baltic Sea from a Finnish national perspective. The stochastic simulation model integrates nutrient dynamics of nitrogen and phosphorus in the sea basins adjoining the Finnish coast, nutrient loads from land and other sources, benefits from nutrient abatement (in the form of recreation and other ecosystem services) and the costs of agricultural abatement activities. The aim of the study is to present the overall structure of the model and to demonstrate its potential using preliminary parameters. The model is made flexible for further improvements in all of its ecological and economic components. The results of a sensitivity analysis suggest that investments in reducing the nutrient load from arable land in Finland would become profitable only if the neighboring countries in the northern Baltic committed themselves to similar reductions. Environmental investments for improving water quality yield the highest returns for the Bothnian Bay and the Gulf of Finland, with smaller returns for the Bothnian Sea. Somewhat surprisingly, in the Bothnian Bay the abatement activities become profitable from the national viewpoint, because the riverine loads from Finland represent a high proportion of the total nutrient loads. In the Gulf of Finland, this proportion is low, but the size of the coastal population benefiting from improved water quality is high. |
Agri-environment contract adoption under fixed and variable compliance costs (2009) 🗎🗎 | This paper analyses the heterogeneity of compliance costs on farmers' choices to participate in agri-environment schemes. The theoretical distinction between fixed and variable costs is used to explain why factors that determine participation may differ from those which determine how much land participants enrol in a scheme. The level of fixed costs may explain why the smallest farms tend to be least likely to participate in such schemes. The empirical analysis presented in the paper compares models estimated with and without the hypothesis of negligible fixed costs. It also discusses the situation where the nature of costs can be identified and isolated. The results show that in the presence of fixed compliance costs, fixed transaction costs are a significant contracting barrier for smallest farms. |
Assessing the Forecasting Performance of a Generic Bio-Economic Farm Model Calibrated With Two Different PMP Variants (2010) 🗎🗎 | Using linear programming in bio-economic farm modelling often results in overspecialised model solutions. The positive mathematical programming (PMP) approach guarantees exact calibration to base year data but the forecasting capacity of the model is affected by necessary but arbitrary assumptions imposed during calibration. In this article, a new PMP variant is presented which is based on less arbitrary assumptions that, from a theoretical point of view, are closer to the actual decision making of the farmer. The PMP variant is evaluated according to the predictions of the bio-economic farm model, developed within the framework for integrated assessment of agricultural systems in Europe (SEAMLESS). The forecasting capacity of the model calibrated with the standard PMP approach and the alternative PMP variant, respectively, is tested in ex-post experiments for the arable farm types of Flevoland (the Netherlands) and Midi-Pyrenees (France). The results of the ex-post experiments, in which we try to simulate farm responses in 2003 using a model calibrated to 1999 data, show that the alternative PMP variant improves the forecasting capacity of the model in all tested cases. |
FSSIM, a bio-economic farm model for simulating the response of EU farming systems to agricultural and environmental policies (2010) 🗎🗎 | The disciplinary nature of most existing farm models as well as the issue specific orientation of most of the studies in agricultural systems research are main reasons for the limited use and re-use of bio-economic modelling for the ex-ante integrated assessment of policy decisions. The objective of this article is to present a bio-economic farm model that is generic and re-usable for different bio-physical and socio-economic contexts, facilitating the linking of micro and macro analysis or to provide detailed analysis of farming systems in a specific region. Model use is illustrated in this paper with an analysis of the impacts of the CAP reform of 2003 for arable and livestock farms in a context of market liberalization. Results from the application of the model to representative farms in Flevoland (the Netherlands) and Midi-Pyrenees (France) shows that CAP reform 2003 under market liberalization will cause substantial substitution of root crops and durum wheat by vegetables and oilseed crops. Much of the set-aside area will be put into production intensifying the existing farming systems. Abolishment of the milk quota system will cause an increase of the average herd size. The average total gross margin of farm types in Flevoland decreases while the average total gross margin of farms in Midi-Pyrenees increases. The results show that the model can simulate arable and livestock farm types of two regions different from a biophysical and socio-economic point of view and it can deal with a variety of policy instruments. The examples show that the model can be (re-)used as a basis for future research and as a comprehensive tool for future policy analysis. (C) 2010 Elsevier Ltd. All rights reserved. |
Conserving natural resources in olive orchards on sloping land: Alternative goal programming approaches towards effective design of cross-compliance and agri-environmental measures (2010) 🗎🗎 | Olive farming on sloping land in southern Europe is facing multiple challenges and it is reasonable to believe that farmers will opt for the abandonment of some systems and intensification or change to organic production of other systems. The issues at stake surpass financial farm viability and two EU policy instruments - cross-compliance and agri-environmental measures (AEM) - are available to address environmental objectives. This paper explores how cross-compliance and AEM policy options may lead to shifts in olive production systems and their social and environmental effects in Tras-os-Montes, NE Portugal over 25 years under two sets of conditions of uncertainty: decision-making by land users and market scenarios. Uncertainty in decision-making is addressed by employing five alternative goal programming models. The models include Linear Programming (LP), Weighted Goal Programming (WGP) and MINMAX Goal Programming (MINMAX GP), the GP variants of which are moreover formulated from a societal (S) and farmer (F) perspective. Uncertainty in market prospects is addressed by projecting olive oil and labour prices and trends in farm subsidies, distinguishing four price combinations in market scenarios. The models were validated by their capability to reproduce the initial configuration of olive production systems. Six policy options are evaluated under the complete ranges of uncertainty factors in a total of 6 x 5 x 4 = 120 model runs. Results show overall large effects of farmer decision-making and market scenarios. The cross-compliance and AEM policy instruments have an unequivocal effect on environmental performance and help to maintain work in rural areas. However, farmer income levels are insensitive to the policies, all work is absorbed by family labour and important environmental issues linked to more intensive systems such as pollution are not addressed. In a case study with the WGP (F) model which best reproduced the initial configuration of production systems, cross-compliance was moreover found to burden farmers under adverse market conditions, while AEM contributed to farmer's objectives under favourable market conditions. A solution would be to focus cross-compliance regulations on intensive systems and offer appropriate AEM for traditional or abandoned orchards. Both policy instruments proved effective, but there is scope for removing substantial overlap between them. (C) 2010 Elsevier Ltd. All rights reserved. |
Ecosystem services from agriculture: Steps for expanding markets (2010) 🗎🗎 | Farmers in the United States produce a wide variety of commodities for food and fiber. Farmers can also produce a variety of non-commodity ecosystem services for which markets do not exist or are imperfectly formed. Such services may be valued by society, but due to their nature or institutional arrangements, farmers often do not receive a price signal for them. This results in inefficient allocations of resources, in that farmers under-produce non-commodity ecosystem services. One possible way to increase private investment in ecosystem services is to create a market for them. We draw lessons from six different markets for providing ecosystem services from farms (water quality trading, wetland mitigation, carbon cap-and-trade, over-the-counter carbon, eco-labeling, and fee hunting) on what is required for a market to function, and the problems these markets might face. Published by Elsevier B.V. |
Agri-Environmental Program Compliance in a Heterogeneous Landscape (2010) 🗎🗎 | Heterogeneity of agricultural landscapes may necessitate the use of spatially targeted instruments. But costly enforcement may be needed to ensure compliance with these policies. This paper examines the design of agri-environmental policies designed to achieve reductions in fertilizer application rates and installation of riparian buffers through the use of incentive-based instruments. We derive monitoring strategies capable of ensuring perfect compliance from risk neutral farmers given realistic limits on penalties for non-compliance. We then apply that framework empirically using a parametric model reflecting Finnish agricultural and environmental conditions. The results of our simulations indicate that subsidies for installing and maintaining buffer strips, used alone, are the most cost effective means of reducing nitrogen runoff from crop production. This policy is also the most attractive politically, in that it reduces farm income less than the alternatives considered. |
Managing increasing environmental risks through agrobiodiversity and agrienvironmental policies (2010) 🗎🗎 | Agrobiodiversity can provide natural insurance to risk-averse farmers by reducing the variance of crop yield, and to society at large by reducing the uncertainty in the provision of public-good ecosystem services, for example, CO2 storage. We analyze the choice of agrobiodiversity by risk-averse farmers who have access to financial insurance, and study the implications for agrienvironmental policy design when on-farm agrobiodiversity generates a positive risk externality. While increasing environmental risk leads private farmers to increase their level of on-farm agrobiodiversity, the level of agrobiodiversity in the laissez-faire equilibrium remains inefficiently low. We show how either one of the two agrienvironmental policy instruments can cure this risk-related market failure: an ex ante Pigouvian subsidy on on-farm agrobiodiversity and an ex post payment-by-result for the actual provision of public environmental benefits. In the absence of regulation, welfare may increase rather than decrease with increasing environmental risk, if the agroecosystem is characterized by a high natural insurance function, low costs, and large external benefits of agrobiodiversity. |
Does encouraging the use of wetlands in water quality trading programs make economic sense? (2010) 🗎🗎 | This paper examines a proposal to incorporate the use of wetlands in water quality trading (WQT) programs in order to meet national wetlands goals and advance WQT. It develops a competitive WQT model wherein wetland services are explicitly considered. To participate in a WQT program, an agricultural producer could employ wetlands as his nutrient management practice. Unlike most other management practices, wetlands not only remove nutrients from agricultural runoff but also provide ancillary benefits like wildlife habitat and flood control that do not exclusively accrue to the farmer. Thus, when appropriate, a WQT program should be coupled with additional incentives for wetland creation and restoration, such as using a wetland subsidy. Despite the water quality enhancement properties of wetlands, the model reveals that implementing a wetland subsidy will not necessarily translate into water quality improvements. While wetland creation is externally incentivized, the farm's opportunity cost of fertilizer usage in the WQT market is also reduced. In this sense, a wetland subsidy acts like a fertilizer subsidy. Conditions under which a wetland subsidy will help expand WQT include some degree of farmland area fixity, which is resembled in some, but not all, watersheds, and high efficiency of the wetland abatement technology. Published by Elsevier B.V. |
Spatially optimal steady-state phosphorus policies in crop production (2010) 🗎🗎 | We analyse optimal phosphorus fertilisation and erosion control policies in a spatial, dynamic, steady-state framework. First-best instruments to incentivise farmers to undertake socially optimal choices are analysed both analytically and empirically. An empirical illustration is presented for a cereal production area of 3 hectares. We find that taxes on phosphorus use can be levied with equal effect either on fertiliser use or directly on soil phosphorus. However, a tax on soil phosphorus is simpler and poses lower information requirements for the social planner. In addition, the potential differences in socially and privately applied discount rates are shown to affect optimal tax rates. |
What Do Farmers Want From Agri-Environmental Scheme Design? A Choice Experiment Approach (2010) 🗎🗎 | Agri-environmental schemes (AES) have had a limited effect on European agriculture due to farmers' reluctance to participate. Information on how farmers react when AES characteristics are modified can be an important input to the design of such policies. This article investigates farmers' preferences for different design options in a specific AES aimed at encouraging nitrogen fixing crops in marginal dry-land areas in Spain. We use a choice experiment survey conducted in two regions (Aragon and Andalusia). The analysis employs an error component random parameter logit model allowing for preference heterogeneity and correlation amongst the non-status quo alternatives. Farmers show a strong preference for maintaining their current management strategies; however, significant savings in cost or increased participation can be obtained by modifying some AES attributes. |
We develop a theoretical model to assess the dollar compensation required to induce conventional growers to convert to organic. The model incorporates the uncertainty in producers' expectations about future returns and about the impact of policy changes on these expectations in particular. We demonstrate that a new policy which favours organic can have opposing effects on the rate of conversion. An increase in relative returns to organic today will increase conversion rates. However, if the future of the policy programme is uncertain, its introduction can increase the value of waiting to switch, which will decrease conversion rates. We then develop an empirical switching regression model that enables direct estimation of the value associated with being able to postpone the conversion decision until some of the uncertainty is resolved. The model is applied to data on organic and conventional soybeans before and after major changes in US farm policy toward organic growers. The results suggest that sunk costs associated with conversion to organic coupled with uncertainty about future returns can help to explain why there is so little organic farmland in the USA. | |
Adverse Selection in the Environmental Stewardship Scheme: Does the Higher Level Stewardship Scheme Design Reduce Adverse Selection? (2010) 🗎🗎 | The Environmental Stewardship Scheme provides payments to farmers for the provision of environmental services based on foregone agricultural income. This creates a potential incentive compatibility problem which, combined with information asymmetry about farm land potential, can lead to adverse selection of land into the Scheme and therefore a less cost-effective provision of environmental goods and services. However, the Higher Level Stewardship (HLS) Scheme design includes some features that potentially reduce adverse selection. This paper studies the adverse selection problem of the HLS using a principal-agent framework at the regional level. It is found that, at the regional level, the enrolment of more land from lower payment regions for a given budget constraint has reduced the adverse selection problem through contracting a greater overall area and thus higher overall environmental benefit. In addition, for landscape regions with the same payment rate (i.e. of the same agricultural value), differential weighting of the public demand for environmental goods and services provided by agriculture (measured by weighting an environmental benefit function by the distance to main cities) appears to be reflected in the regulator's allocation of contracts, thereby also reducing the adverse selection problem. |
The future of olive groves on sloping land and ex-ante assessment of cross compliance for erosion control (2010) 🗎🗎 | Under the past Common Agricultural Policy (CAP) olive oil subsidy regime, farmers were eligible for subsidies on the basis of the amount of olive oil they produced. This led to an intensification of production, particularly on flat land, and had in most cases negative environmental effects, such as more soil erosion on sloping land and more pollution. With the decoupling of agricultural support under the newly established rules of the CAP. formalised in 2005, cross compliance measures have become obligatory. In this paper an ex-ante assessment is made of the application of cross compliance for soil erosion control (natural cover crops and terrace maintenance) in hilly and mountainous olive groves in TrAs-os-Montes in Portugal. A linear programming model was developed to assess the various socio-economic and environmental effects of four different development scenarios for olive groves. The scenarios were developed on the basis of changing market prices, wage rates and subsidies; their effects included shifts towards intensification. abandonment and organic farming. Simulations considering a minimum return to labour constraint showed very high levels of abandonment, particularly in combination with cross compliance obligations. However, even without this minimum return to labour constraint. abandonment would reach more than 20% in three out of the four scenarios. The model showed that cross compliance obligations could be quite effective in reducing erosion, but that they would depress income in all scenarios as a result of higher abandonment and lower percentage shifts towards intensive systems. (C) 2008 Elsevier Ltd. All rights reserved. |
The estimation of agricultural policy effects on soil erosion-An application for the bio-economic model MODAM (2010) 🗎🗎 | As agricultural policies affect land use, they have effects on the amount of soil erosion in agricultural regions through changes of the economic conditions of agricultural production. Prices of inputs and outputs, regulations and incentives can change, forcing or encouraging farmers to adopt new crop rotations. This paper shows how a bio-economic model can be used to describe and estimate the effects of policies on agricultural production and the risk of soil erosion at the example of a region in North-Eastern Germany. The model uses both an assessment tool that is based on a fuzzy-logic approach for the estimation of soil erosion risk of cropping practices, and a linear programming model, that simulates farmers' economic behaviour under the assumption of gross margin maximisation being the main goal of farmers' actions. The analysed policy options were both a targeted and an untargeted incentive programme for reduced tillage, and a restriction option where high erosive crops are not allowed on high erodible field types. The results show that policy changes can have an impact on soil erosion. Furthermore, soil conservation policies are shown to have different levels of efficiency in terms of reduced soil erosion related to the costs of the policy. In the case of this study. a restriction option was more efficient than the incentive options. The results of such simulations can serve as a decision support for the development of soil conservation policies and help to foresee the effects of general changes of agricultural policies. (C) 2008 Elsevier Ltd. All rights reserved. |
A multi-agent simulation model for spatial optimisation of manure allocation (2010) 🗎🗎 | The EU Nitrate Directive has spurred many countries to regulate manure production and manure application. Farmers have three allocation options: spreading manure on their own land, transporting manure to other farmers' land or processing manure. The manure problem can be seen as an allocation problem. To better understand this allocation problem, we have developed the spatial mathematical programming multi-agent simulation (MP-MAS) model. This model has been applied in Flanders, Belgium, a region with a high concentration of livestock. The model evaluates the cost efficiency of policy intervention in the manure market through obliged processing. We propose to further optimise the policy using a regionally differentiated manure pressure indicator, which is directly derived from the dual outcome of the mathematical programme. This indicator increases transparency in the manure and processing market, leading to better decision support about location and type of manure processing. |
Agricultural policy regime change assessment: Austrian accession to the European union (2010) 🗎🗎 | Policy regime change evaluation involves assessing what would have been had the policy not changed. In this paper, we empirically assess the impact on Austrian pig producers of the 1995 decision of Austria to join the European Union. Applying a recently developed Hausman-Wu-Type cointegration test, we confirm the existence of a cointegrating relationship between Austrian and EU pig prices series. This relationship is used to forecast the counterfactual time path of prices. Within an expected utility framework, we compute the Austrian producer's willingness to pay to remain under the pre-accession policy. Accounting for the dual income and insurance effects, we found producers to have been under-compensated. Conventional welfare measures which do not include the insurance component would significantly underestimate the total welfare impact. |
Integrated assessment of water framework directive nitrate reduction measures (2010) 🗎🗎 | This article illustrates a statistical approach for deriving farm economic impacts of policy options aiming to reduce nitrate diffuse pollution. Building upon Fezzi et al. (2008), who assess the costs of Water Framework Directive-related measures on farm accounts data, we estimate regression models allowing such costs to be predicted for any region for which land use patterns and livestock numbers are known. We derive economic impacts in terms of changes in farm gross margin for (a) reducing inorganic fertilizer application, (b) reducing livestock stocking rates, and (c) converting arable land to ungrazed grassland. A case study of the agriculturally diverse Yorkshire Derwent catchment, in the North of England, demonstrates the overall approach. In addition, for this illustration, we combine these cost estimates with prediction of the water quality changes arising from each measure, derived via an integrated hydrological model of the Derwent. This allows a comparison of cost-effectiveness. Finally, we implement our spatially explicit approach to target the measures to specific subcatchments identified as being of particular environmental policy interest. |
Evidence of slowing yield growth - The example of Swiss cereal yields (2010) 🗎🗎 | We analyze trends in crop yields and yield variability of barley, maize, oats, rye, triticale and wheat in Switzerland from 1961 to 2006. It shows that there have been linear increases in crop yields since the 1960s. However, yields of barley, oats, rye, triticale and wheat have leveled off in Switzerland since the early 1990s, which contrasts linear trends in cereal yields that is usually assumed for Europe. We show a relationship between the introduction of agricultural policy measures towards environmentally friendly cereal production that fostered widespread adoption of extensive farming practices and the observed leveling-off of crop yields. Thus, this paper emphasizes that agricultural policy can be an important reason for slowing crop yield growth. Agricultural policy measures will be one of the key driving forces of future crop yields. Thus, the potential leveling-off of crop yields that is indicated in this study should be considered in analyses of future land use and food supply as well as in the evaluation of agri-environmental measures and policy reforms. (C) 2009 Elsevier Ltd. All rights reserved. |
Modelling pesticide risk: A marginal cost-benefit analysis of an environmental buffer-zone programme (2010) 🗎🗎 | A newly developed indicator of the pesticide risk for aquatic biocenosis in surface water bodies is applied within an economic sector model, and is used to evaluate alternative designs for an environmental policy programme. For rural districts ('Landkreise') across Germany, different widths of riparian buffer zones adjacent to surface water bodies are evaluated in terms of efficient cost/risk ratios. The indicator is defined as acute risk under worst-case input conditions and is based on combining a sectoral model, a national survey on pesticide use and a toxicological risk assessment model. The nationwide survey provides data on pesticide use by agricultural crop. On this basis, crop-specific risk indices for aquatic biocenosis are calculated by means of eco-toxic criteria for indicator organisms and aggregated through crop patterns to the rural-district level. GIS is used to calculate the influences of natural site factors (e.g. soil types. land use distance to water bodies, etc.) on pesticide input in surface water and to calculate the regional risk potentials at regional level. An economic cost-impact analysis is conducted based on the new indicator. Opportunity costs of converting agricultural land to riparian buffer strips are estimated using the agricultural sector model RAUMIS, for buffer strip widths of 3.30 and 50 m, as per the European the environmental programme EC 99/1257/EEC. These costs are then compared with estimated risk reduction potentials at the regional level of administrative districts. Results show that cost-impact ratios are most efficient for 3 m buffer strips and in those regions with the lowest costs from changing agricultural land use (e.g. through reduced livestock production). A major furore research need in this area is a higher spatial resolution at the grid-level. (C) 2009 Elsevier Ltd. All rights reserved. |
The Costs of Meeting the Environmental Objectives for the Baltic Sea: A Review of the Literature (2010) 🗎🗎 | The environmental targets of the recently agreed Baltic Sea Action Plan (BSAP) targets are likely associated with a considerable cost, which motivates a search for low-cost policies. The following review shows there is a substantial literature on cost-efficient nutrient reduction strategies, including suggestions regarding low-cost abatement, but actual policies at international and national scale tend to be considerably more expensive due to lack of instruments that ensure a cost-efficient allocation of abatement across countries and sectors. Economic research on the costs of reducing hazardous substances and oil spill damages in the Baltic Sea is not available, but lessons from the international literature suggest that resources could be used more efficiently if appropriate analysis is undertaken. Common to these pollution problems is the need to ensure that all countries in the region are provided with positive incentives to implement international agreements. |
Non-point-source (NPS) pollution refers to a form of pollution in which neither the source nor the size of specific emissions can be observed or identified with sufficient accuracy. In NPS pollution the ambient concentration of pollutants associated with the individually unobserved emissions is typically observed. NPS pollution due to agricultural runoff is a major source of water pollution, eutrophication, and hypoxia. Due to informational asymmetries and stochastic effects, the use of traditional environmental policy instruments such as emissions taxes or tradable quotas to regulate NPS pollution is very difficult. This article reviews the main theoretical approaches, up to the present, to the regulation of NPS pollution-input-based schemes, ambient schemes, and endogenous monitoring-and discusses issues associated with NPS pollution regulation and their relation to the theoretically proposed instruments. | |
Policy Considerations for Mandating Agriculture in a Greenhouse Gas Emissions Trading Scheme (2011) 🗎🗎 | The question of whether or not the agricultural sector should be covered in a GHG ETS is prominent in policy debates surrounding the design and implementation of such proposed schemes in many developed nations. This paper identifies two key economic elements that determine both the costs and the benefits of mandating agriculture in an ETS. These are: the costs of reducing GHG emissions in agriculture, and the transactions costs pertinent to covering agriculture in an ETS. Published data on these elements is used to derive a likely range of the overall social costs of mandating the agricultural sector in a GHG ETS. Current indicators of those costs for agriculture, and for the other sectors of the economy, do not offer evidence that mandating agriculture in an ETS would be socially beneficial. Alternative approaches to engaging the agricultural sector in GHG emission reduction, e. g. through voluntary opt-in or through offsetting credits, are likely to be more beneficial. |
Regional employment impacts of Common Agricultural Policy measures in Eastern Germany: a difference-in-differences approach (2011) 🗎🗎 | Politicians and farm lobbyists frequently use the argument that agricultural policy is necessary to safeguard jobs in agriculture. We explore whether this is true by conducting an econometric ex post evaluation of the European Union's Common Agricultural Policy (CAP) in the three East German States Brandenburg, Saxony, and Saxony-Anhalt. Whereas previous studies have employed descriptive statistics or qualitative methods and have looked at single policy instruments in isolation, we apply a difference-in-differences estimator to analyze the employment effects of the entire portfolio of CAP measures simultaneously. Based on panel data at the county level, we find that investment aids and transfers to less-favored areas had a zero marginal employment effect. We present evidence that full decoupling of direct payments in 2005 led to labor shedding, as it made transfer payments independent of factor allocation. Spending on modern technologies in processing and marketing and measures aimed at the development of rural areas led to job losses in agriculture. Agrienvironmental measures, on the other hand, kept labor-intensive technologies in production or induced them. This analysis calls into question whether an expansion of existing second pillar measures is a reasonable way to use funds modulated away from the first pillar. |
Agri-environmental policy and moral hazard under multiple sources of uncertainty (2011) 🗎🗎 | Risk aversion has been considered a factor in mitigating the moral hazard problem in agri-environmental policy. If farmers face multiple sources of uncertainty, however, risk aversion could contribute to the problem. Focusing on a required reduction in the use of a potentially damaging input under an agri-environmental scheme, we address the implications of risk aversion for a farmer's decision on compliance. We show that risk aversion can indeed mitigate the moral hazard problem, but, if a required change in production practices increases output risk, the impact of risk aversion is ambiguous. |
Farming system modelling for agri-environmental policy design: The case of a spatially non-aggregated allocation of conservation measures (2011) 🗎🗎 | This paper addresses the issue of designing policies for habitat conservation on agricultural land. The case under study requires a non-aggregated spatial distribution of the fields to be enrolled in an agri-environmental programme. A spatially explicit mathematical programming farm-based model, which accounts for three spatial levels (field, farm and landscape), is coupled with a relevant spatial pattern index (the Ripley L-function) to analyse the design and implementation of an agri-environmental programme aimed to preserve the Tetrax tetrax in the Plaine de Niort, France. The model is run using a stylised map with heterogeneous soil types and both crop growing and mixed dairy farms. Results show that valuable insights into agri-environmental programme design are gained through a detailed representation of farming system management. The suitable, non-aggregated spatial pattern for T. tetrax conservation is more costly than less-suitable, more aggregated patterns, because it tends to require equal participation of all farms. The policy simulations reveal that the various spatial patterns can be obtained through relatively simple uniform contract structures. An effective contract structure entails a set of two degressive payments which encourages all farms to enrol at least a small share of their land in the program. (C) 2011 Elsevier B.V. All rights reserved. |
Simulation of alternative dairy farm pollution abatement policies (2011) 🗎🗎 | New Zealand dairy farmers face a tradeoff between profit maximisation and environmental performance. The integrated simulation model presented here enables assessment of the economic and environmental impact of dairy farming with a focus on nitrogen pollution at the catchment level. Our approach extends the value of the DairyNZ Whole Farm Model (Beukes et al., 2005) as an environmental policy tool by building and integrating nitrogen discharge functions for specific soil types and topography using a metamodelling technique. A hybrid model is created by merging the merits of differential evolution and non-linear optimisation to expedite policy simulations, in which farm profits and nitrogen discharges obtained from the differential evolution optimisation process are assembled to form a profit pollution frontier. This frontier is then subject to constrained optimisation based on non-linear optimisation in order to predict producer responses to alternative pollution control policies. We apply this framework to derive marginal abatement costs for heterogeneous farm types and find that abatement costs for intensive farms are lower than for moderate and extensive farming systems. We further conclude that abatement can be achieved more cheaply using a compulsory standard or threshold tax than using a standard emissions tax. (C) 2010 Elsevier Ltd. All rights reserved. |
The trade-off between agriculture and biodiversity in marginal areas: Can crofting and bumblebee conservation be reconciled? (2011) 🗎🗎 | Crofting is a low intensity agricultural system restricted to the Highlands and Islands of northern Scotland typified by small scale mixed livestock production and rotational cropping activities. As with other low intensity farming systems across Europe, crofting is changing in response to a range of socio-economic factors. This is having a negative impact on the populations of rare bumblebees that are associated with this agricultural system. In this paper we use an ecological-economic modelling approach to examine the likely impacts of introducing two different management options for conserving bumblebees on croft land-use and income. Two linear programming models were constructed to represent the predominant crofting systems found in the Outer Hebrides, and varying constraints on bumblebee abundance were imposed to examine the trade-off between conservation and agricultural incomes. The model outputs illustrate that in some instances it is likely that both agricultural profits and bumblebee densities can be enhanced. We conclude that policy-makers should take into consideration the type of farming system when designing cost-effective agri-environment policies for low intensity farming systems, and that improvements in bee conservation are not necessarily in conflict with maintaining farm income. (C) 2011 Elsevier B.V. All rights reserved. |
A Holistic vs. an Attribute-based Approach to Agri-Environmental Policy Valuation: Do Welfare Estimates Differ? (2011) 🗎🗎 | Different economic valuation methodologies can be used to value the non-market benefits of an agri-environmental scheme. In particular, the non-market value can be examined by assessing the public's willingness to pay for the policy outputs as a whole or by modelling the preferences of society for the component attributes of the rural landscape that result from the implementation of the policy. In this article we examine whether the welfare values estimated for an agri-environmental policy are significantly different between an holistic valuation methodology (using contingent valuation) and an attribute-based valuation methodology (choice experiment). It is argued that the valuation methodology chosen should be based on whether or not the overall objective is the valuation of the agri-environment policy package in its entirety or the valuation of each of the policy's distinct environmental outputs. |
A MODEL FOR ESTIMATING PREMIUMS TO REDUCE IRRIGATION ON FARMS (2011) 🗎🗎 | This paper aims to determine the minimum agri-environmental premium per hectare that farmers should receive to reduce crop irrigation. To this end, the authors develop a mixed-integer quadratic model using a new methodology based on traditional positive mathematical programming, which allows the inclusion in the model of crop variants that are not present in the baseline situation of the farms. What is shown is that the results obtained with this new methodology, using the cost average approach of calibration, are the same as those obtained with an empirical method, when there is no change of crop distribution after the changeover from irrigated to nonirrigated farms. The theoretical results are compared with those obtained using the calibration with exogenous elasticities and are illustrated numerically for a representative farm of an area around Spain's Tablas de Daimiel in which the use of groundwater for crop irrigation has led to the ongoing deterioration of wet-lands that depend on the same source of water, endangering the region's environmental sustainability. |
Structural Agricultural Land Use Modeling for Spatial Agro-Environmental Policy Analysis (2011) 🗎🗎 | This paper develops a spatially disaggregated, structural econometric model of agricultural land use and production based on the joint multi-output technology representation introduced by Chambers and Just (1989). Starting from a flexible specification of the farm profit function, we derive land use allocation, input application, crop yield, and livestock intensity equations in a joint and theoretically consistent framework. To account for the presence of censored observations in micro-level data, the model is estimated as a system of two-limit Tobit equations via quasi-maximum likelihood. We present an empirical application using fine-scale spatial data covering the entirety of England and Wales and including the main economic, policy, and environmental drivers of land use change in the past forty years. A simulation of the effects of diffuse pollution reduction measures illustrates how our approach can be applied for agro-environmental policy appraisal. |
Evaluating environmental policies under uncertainty through application of robust nonlinear programming (2011) 🗎🗎 | Environmental policy evaluation is characterised by a paucity of information. The novel technique of robust mathematical programming is introduced as a means to proactively account for this uncertainty in policy analysis. The procedure allows identification of expected bounds on the range of abatement costs associated with environmental policy. It also has the advantage of not limiting conclusions to realisations of specific point estimates or probability distributions. Empirical insights are provided in an application to a New Zealand inland lake threatened by nitrate pollution from dairy farming. Overall, this novel framework is demonstrated to have several key advantages, including explicit treatment of severe uncertainty, capacity to bound the range of expected abatement costs accruing to a given policy instrument, and the opportunity to identify robust plans that are immune to parametric variation. |
Determinants of farmers' willingness to participate in subsidy schemes for pesticide-free buffer zones-A choice experiment study (2011) 🗎🗎 | Danish farmers have been far less interested in agri-environmental subsidy schemes (AES) than anticipated. In order to examine how to improve the appeal of such schemes, a choice experiment was conducted concerning 444 Danish farmers' preferences for subsidy schemes for pesticide-free buffer zones. A random parameter logit framework was used to capture heterogeneity among farmers. Our results indicate that 1) the vast majority of farmers are willing to trade off the size of the subsidy for less restrictive scheme requirements and that 2) the amount of the subsidy they are willing to trade off varies with specific scheme requirements, suggesting which features are most important for successful policy design. Our results suggest that farmers value flexible contract terms higher than reduced administrative burdens. Finally, we suggest a practical approach to estimating a monetary value of farmers' reluctance to participate in AES. While the trade off's that farmers are willing to make between subsidy size and individual scheme requirements are case specific, our results concerning increased use of farm advisors, farmers ability of valuing different types of flexibility, and our attempt to place a monetary value on farmers' reluctance to engage in regulatory subsidy schemes have a potentially broader application platform. (C) 2011 Elsevier B.V. All rights reserved. |
Potential Economic Impacts of the Managed Haying and Grazing Provision of the Conservation Reserve Program (2011) 🗎🗎 | The Food Security and Rural Investment Act of 2002 included a new provision that allowed managed haying and grazing (including the harvest of biomass), if consistent with the conservation of soil, water quality, and wildlife habitat, in return for partial reductions in the annual CRP payments. The legislation provided for managed (or limited use) haying and grazing on the CRP acreage rather than prohibiting all use. This research analyzed whether or not the alternative grazing and haying scenarios would dramatically impact the price of beef or hay, and we estimated the impact such changes would have on state economies. |
Economic impacts of climate-related changes to California agriculture (2011) 🗎🗎 | California agriculture is driven by the interactions between technology, resources, and market demands. Future production is a balance between the rates of change in these variables and environmental factors including climate change. With tight statewide water supplies and agriculture being an important part of the California economy, quantifying the economic consequences of changes in these variables is important for addressing related policy questions. We estimate the economic effects of climate change on California crop farming by year 2050 using the Statewide Agricultural Production Model (SWAP). With climate warming, crop yields are expected to decline, production costs to increase, and water supplies to fall. These negative effects may be partially offset by higher crop prices and technological improvements. Results indicate that gross agricultural revenues across all regions are reduced under climate change, as is water usage. However, given the climate-induced reductions in water supply and crop yields, reductions in revenue are proportionally less due to shifting crop demands, technological change, and a shift to higher value less water intensive crops. Given the long time horizon required in this study, the results should not be considered a projection or forecast, but as a probable outcome of the interaction of several uncertain driving forces. |
Modeling farmer participation in agri-environmental nitrate pollution reducing schemes (2011) 🗎🗎 | Why do farmers choose to participate in agri-environmental programmes and how do they choose the amount of land they allocate to such programmes? This paper examines the determinant factors influencing farmers' adoption of the EU-financed agri-environmental Nitrate Reduction Programme (NRP) in Greece and the extent of the programme's adoption, in terms of land allocation. The decision to adopt the NRP is modeled as a two-step procedure. First, farmers decide whether to participate in the agri-environmental programme and second, the extent of participation is determined. We employ Heckman's self-selection bias correction model to derive unbiased estimates. Based on farm level data, we develop the profile of farmers who choose to adopt the agri-environmental programme and the characteristics of their farms. The results of the analysis provide valuable policy insights decomposed into the main factors determining first, the adoption of the agri-environmental programme and second, the extent of adoption. By decomposing the determining factors, policy makers can employ this information to design effective agri-environmental programmes, desirable to farmers and more targeted towards specific environmental and agricultural development goals. (C) 2011 Elsevier B.V. All rights reserved. |
Markets of concentration permits: The case of manure policy (2011) 🗎🗎 | Concentration permits are regarded as an interesting policy tool for regulating emissions where, besides absolute amounts, also local concentration is important. However, effects of governance structure, trading system and possible policy interventions in the permits' allocation are not yet well analysed and understood. This paper explores in how far tradable fertilisation standards can be seen as a concentration permit trading (CPT) system which can be fine-tuned for further policy intervention. Indeed fertilisation standards such as obliged by the EU Nitrate Directive can be regarded as local nitrate emissions limits, and thus concentration permits. A multi-agent spatial allocation model is used to simulate the impact of defining the manure problem in terms of concentration permits rather than conventional emission permits. Impacts are simulated in terms of environmental performance and increased reallocation costs. The model is applied on the Flemish manure problem. (C) 2011 Elsevier B.V. All rights reserved. |
Common Agricultural Policy effects on dynamic labour use in agriculture (2012) 🗎🗎 | The aim of this study is to investigate the effects of direct payments and rural development measures of the EU's Common Agricultural Policy (CAP) on employment in agriculture. We work with a dynamic labour demand equation augmented by the full set of policy instruments of the CAP, which is estimated on a panel dataset of 69 East German regions. We present results for four estimators which differ in how they eliminate the fixed effects and how they address the endogeneity of the lagged dependent variable. The results suggest that there were few desirable effects on job maintenance in agriculture. While there is some indication that investment subsidies have halted labour shedding on farms, a rise in the general wage level reduced labour use in agriculture. Changes in direct payments had no employment effects. Generally, labour adjustment exhibits a strong path dependency. (C) 2012 Elsevier Ltd. All rights reserved. |
NORWEGIAN SALMONID FARMING AND GLOBAL WARMING: SOCIOECONOMIC IMPACTS (2012) 🗎🗎 | Temperature increases in Norwegian waters are likely to influence productivity for salmonid aquaculture. As sites are experiencing different temperature regimes, the impact on productivity will vary. The spatial distribution of Norwegian salmon fanning depends on both institutional and physical conditions. At present, the general location of farms is restricted by the authorities, but in the case of large productivity differences, this regime may be liberalized. This study analyzes the impact of increased temperature on the spatial distribution of production and employment. We vary temperature and management regime in four scenarios and a 30 year time span. Total production is based on linear demand growth, serving as a restriction in the subsequent model. Productivity per county is determined in a temperature-driven model, and a separate model predicts the relocation of licenses between counties. An input output model captures the direct and indirect effects of aquaculture production. Our findings indicate substantially differing effects on the spatial distribution of production and hence value added and employment. In the baseline scenario, production growth is relatively equal among the northern, middle and southern parts of Norway. Increased temperature shifts production considerably north, both in the case of stable and liberalized management. |
Cost-effectiveness analysis of policy instruments for greenhouse gas emission mitigation in the agricultural sector (2012) 🗎🗎 | Market-based policy instruments to reduce greenhouse gas (GHG) emissions are generally considered more appropriate than command and control tools. However, the omission of transaction costs from policy evaluations and decision-making processes may result in inefficiency in public resource allocation and sub-optimal policy choices and outcomes. This paper aims to assess the relative cost-effectiveness of market-based GHG mitigation policy instruments in the agricultural sector by incorporating transaction costs. Assuming that farmers' responses to mitigation policies are economically rationale, an individual-based model is developed to study the relative performances of an emission tax, a nitrogen fertilizer tax, and a carbon trading scheme using farm data from the Scottish farm account survey (FAS) and emissions and transaction cost data from literature metadata survey. Model simulations show that none of the three schemes could be considered the most cost effective in all circumstances. The cost effectiveness depends both on the tax rate and the amount of free permits allocated to farmers. However, the emissions trading scheme appears to outperform both other policies in realistic scenarios. (C) 2012 Elsevier Ltd. All rights reserved. |
Cost-effective policies for improving water quality by reducing nitrate emissions from diverse dairy farms: An abatement-cost perspective (2012) 🗎🗎 | A flexible and replicable approach for the appraisal of the cost-effectiveness of various policy instruments for the regulation of nonpoint pollution from heterogeneous farms is presented. The framework is employed to evaluate three regulatory instruments for achieving reductions in nitrate leaching among a large population of dairy farms in the Waikato region of New Zealand. These instruments are (1) a differentiated policy that allows individual abatement effort to vary among farms to satisfy a catchment-wide reduction in leaching load, (2) a uniform policy that requires all farms to reduce emissions by a constant proportion, and (3) a threshold policy that requires all farms to emit beneath a given threshold leaching load. A 30% reduction in leaching will cost around 1.4, 1.96, and 4.41 million dollars across the catchment with a differentiated, uniform, and threshold policy, respectively. In comparison, a 50% reduction in leaching will cost around 7.77, 8.58, and 11.24 million dollars across the catchment with a differentiated, uniform, and threshold policy, respectively. Thus, a differentiated policy achieves required environmental outcomes at least cost. This result highlights the value of modelling heterogeneous farms in policy evaluation for nonpoint pollution control. (C) 2011 Elsevier B.V. All rights reserved. |
Controlling greenhouse gas emissions in Spain: what are the costs for agricultural sectors? (2012) 🗎🗎 | Employing a recursive dynamic computable general equilibrium (CGE) model of the Spanish economy, this study explicitly aims to characterise the potential impact of Kyoto and European Union environmental policy targets on specific agricultural activities up to 2020. The model code is modified to characterise the emissions trading scheme (ETS), emissions quotas and carbon taxes, whilst emissions reductions are applied to all six registered greenhouse gases (GHGs). Compared to a 'business-as-usual' baseline scenario, by 2020, GDP and employment fall 2.1% and 2.4%, respectively, whilst the retail price index rises 3.4%. In agriculture, the indices of output (4.3% fall), and supply price (7.7% rise) perform relatively worse, whilst there is a concomitant cumulative fall in aggregate farm incomes of (sic)1,510 million by 2020. The more notable impact in agriculture is attributed to its relatively higher emissions intensity. Consequently, we record an agricultural marginal abatement cost estimate of (sic)86 ton(1) of CO2 equivalent by 2020, which is consistent with other estimates in the literature. In addition, we find that the optimal mix of emissions reductions across specific agricultural sectors is a function of the degree of substitutability of their emitting activities. In light of estimated income losses within the strategically important farm sector, a final simulation contemplates an 'agricultural cost-neutral' emissions reduction policy akin to a cross compliance payment between 2013 and 2020. This is found to reduce food price rises, whilst altering the optimum mix of agricultural emissions reductions across specific agricultural activities. |
Benefit transfer and spatial heterogeneity of preferences for water quality improvements (2012) 🗎🗎 | The improvement in the water quality resulting from the implementation of the EU Water Framework Directive is expected to generate substantial non-market benefits. A wide spread estimation of these benefits across Europe will require the application of benefit transfer. We use a spatially explicit valuation design to account for the spatial heterogeneity of preferences to help generate lower transfer errors. A map-based choice experiment is applied in the Guadalquivir River Basin (Spain), accounting simultaneously for the spatial distribution of water quality improvements and beneficiaries. Our results show that accounting for the spatial heterogeneity of preferences generally produces lower transfer errors. (C) 2012 Elsevier Ltd. All rights reserved. |
Using Microsimulation to Maximise Scarce Survey Data: Applications for Catchment Scale Modelling and Policy Analysis (2012) 🗎🗎 | Microsimulation can be used to extend the use of scarce survey resources by creating simulated populations whose characteristics are close to those of the real population. The technique involves merging detailed survey observations with variables from more extensive data sets in order to create a simulated population. We illustrate how microsimulated data enable analysis of the economic and environmental impact of different policies on a catchment for which detailed farm level data was unavailable. Use of microsimulation for agri-environmental policy analysis is applicable to diverse problems from simulation of nitrogen trading to modelling of agent response to policy shocks. Scale flexibility is easily implemented since data can be aggregated or disaggregated to the preferred scale. Simulated catchment data allows better understanding of the effects of policies on different types of farm and should be extremely valuable to organisations that want to minimise the economic impact of environmental policies. |
Policy incentives for switchgrass production using valuation of non-market ecosystem services (2012) 🗎🗎 | This study presents a linear profit model with combined economic and environmental factors for a switchgrass-for-biofuels agricultural system in the southeastern U.S. The objectives are to establish conversion-to-switchgrass thresholds for various market prices and identify policy incentives that would ensure economic profit while also maximizing environmental benefits (carbon sequestration, displacement of fossil fuels) and minimizing negative impacts (global warming potential, nitrate loss). Weighting factors are chosen to represent incentives and penalties by assigning value to the impacts. With no other incentives, switchgrass market prices of at least $51 and $58/dton would be needed in order to make a profitable switch from corn/Conservation Reserve Program (CRP) lands and cotton, respectively. At a mid-range offering of $50/dton, feasible carbon credit prices of $3/ $8/ $23 per metric tonne CO(2)e would incentivize conversion from corn, CRP, or cotton, respectively. Similarly, a water quality penalty of $0.20/ $3/ $2 per kilogram NO3-N leached would incentivize the same conversions with resultant watershed improvement. At a lower price of $30/dton switchgrass, incentives based on valuation of ecosystem services begin to exceed feasible ranges of these valuations. (C) 2012 Elsevier Ltd. All rights reserved. |
Modelling the Linkages between Cross-Compliance and Agri-Environmental Schemes Under Asymmetric Information (2012) 🗎🗎 | Agri-environmental schemes (AESs) and cross-compliance (CC) are the two main components of the common agricultural policy (CAP) that address environmental issues. Under regulation 1698/2005, agri-environmental scheme design has been established in such a way as to use CC as the baseline against which prescriptions and payments are identified. In this framework, agri-environmental payments to farmers are justified only for the component of public goods produced (if any) above the CC prescription level. This constraint has become a major determinant of the design of agri-environmental schemes in all EU Member States in which both instruments are implemented. This paper investigates farmer participation, compliance choices and the socially optimal level of monitoring when CC and agri-environmental schemes are jointly considered, and when information about compliance is asymmetrically distributed between farmers and the public regulator. The results show that the two policy instruments interact with each other, with agri-environmental payments actually providing incentives for CC, when the CC monitoring and sanction system does not guarantee full compliance. However, the numerical example in Emilia-Romagna (Italy) demonstrates that with the present combination of controls and sanctions, farmers have very little incentive to be compliant with both cross compliance and agri-environmental schemes. Hence, the results highlight that monitoring in CC or in AES does not have the same effect on the farmers compliance. This underscores the need for further research in this field, particularly as provision of environmental goods becomes more important in the future CAP. |
Can economic incentives encourage actual reductions in pesticide use and environmental spillovers? (2012) 🗎🗎 | Chemical pesticides constitute an important input in crop production. But their indiscriminate use can impact negatively agricultural productivity, human health, and the environment. Recently, attention is focused on the use of economic incentives to reduce pesticide use and its related indirect effects. The aim of this work is to assess the effectiveness of different economic instruments such as taxes and levies in encouraging farmers to decrease pesticide use and their environmental spillovers. A policy simulation model is employed using data from Dutch cash crop producers including two pesticide categories that differ in terms of toxicity and pesticides environmental spillovers. Four different instruments were selected for evaluation: pesticide taxes, price penalties on pesticides environmental spillovers, subsidies, and quotas. The results of the study indicate that even high taxes and penalties would result in a small decrease in pesticide use and environmental spillovers. Taxes that differentiate according to toxicity do not lead to substitution of high- with low-toxicity pesticides. Subsidies on low-toxicity products are not able to affect the use of high-toxicity products. Pesticide quotas are more effective in reducing pesticide use and environmental spillovers. |
The effect of EU derogation strategies on the compliance costs of the nitrate directive (2012) 🗎🗎 | Within the framework of the nitrate directive, member states have the opportunity to apply for derogation, i.e. increasing fertilisation standards under certain conditions. Several EU regions have utilised this opportunity, but each in a different way, resulting in six very different derogation policies within the EU in 2009. This paper focuses on the differences between the policies applied and makes an assessment with regard to the impact of these differences on the application rate for derogation, the manure surplus and the cost of allocating manure. Based on the MP-MAS model described by Van der Straeten et al. (2010) the different scenarios are applied on a single case area (Flanders) and the economic effects have been simulated. Results show considerable differences between the policy alternatives, leading to the conclusion that member states not only have to focus on whether or not to allow derogation, but also on the actual details of the derogation policy. Granting derogation at parcel level (plot of land), instead of farm level, increases the potential effect of derogation; the level of increase in fertilisation standards under derogation determines the application rate for derogation: a higher increase leads to a higher application rate. (C) 2012 Elsevier B.V. All rights reserved. |
Reducing greenhouse gas emissions from agriculture: Avoiding trivial solutions to a global problem (2012) 🗎🗎 | Three steps are required to successfully and efficiently reduce greenhouse gas (GHG) emissions from agriculture: (i) identification of the most GHG polluting farms, (ii) determining appropriate mitigation options for these farms, and (iii) selection between these options on the basis of their cost effectiveness. Carbon footprints of a sample of farms together with an analysis of the Kyoto Protocol show the difficulties encountered at each step. These difficulties are caused by: (i) failure to agree which functional unit to use to measure GHG emissions and pollution swapping; (ii) weaknesses in the Kyoto Protocol's territorial/production based accounting methodology, and (iii) lack of cost-effectiveness data. One consequence is that farmers may adopt mitigation activities that reduce their farm's, the UK agriculture sector's and the UK's emissions whilst inadvertently increasing global emissions: a trivial solution because it fails to address GHG emissions as a global problem. These difficulties, together with estimated agriculture sector marginal abatement cost curves that suggests emission reduction from all cost effective mitigation activities will not deliver targeted GHG emission reductions, means policy focus must be on demand rather than supply-side measures: the benefits and disadvantages of cap and trade mechanisms and carbon taxes are briefly discussed within an agricultural context. (C) 2011 Elsevier Ltd. All rights reserved. |
Swedish nutrient reduction policies: an evaluation of cost-effectiveness (2012) 🗎🗎 | Since more than 30 years, the Swedish government as well as other governments in the drainage basin strives toward a reduction in nutrient loads to Baltic Sea coastal waters in order to combat eutrophication of the sea. In spite of this, the cost-effectiveness of actual environmental policy for meeting Baltic Sea nutrient targets has not been evaluated by national or international bodies in the region. The aim of this paper is to evaluate Swedish national nitrogen and phosphorus policies with regard to cost-effectiveness. This is done through a comparison of nutrient measures implemented through environmental policy decisions 1995-2005 with cost-effective policies for present national as well as Baltic Sea Action Plan (BSAP) targets. The cost-effective measures are calculated using an empirical programming model including all countries adjacent to the Baltic Sea. Calculations show that measures that jointly reduce nitrogen and phosphorus are hardly applied in actual policy and that reductions in the agricultural sector are much smaller than is cost-effective. Data show, surprisingly, that considerable reductions have been carried out in the Bothnian Sea catchment in spite of there being no nutrient reduction target for this catchment. Results suggest also that the Swedish costs for meeting the new and geographically more restricted targets under the BSAP can be reduced if a policy with less restrictions on the location of phosphorus abatement is applied, compared to what is now suggested. |
Empirical evaluation of nonpoint pollution policies under agent heterogeneity: regulating intensive dairy production in the Waikato region of New Zealand (2012) 🗎🗎 | Models used for policy evaluation rarely consider firm heterogeneity, despite its importance for instrument design. This study considers agent heterogeneity explicitly in the evaluation of policies for nonpoint pollution control through the integration of decomposition and calibration procedures for programming models. The application concerns the regulation of nitrate leaching from intensive dairy production in the Waikato region of New Zealand. Failing to represent firm heterogeneity leads to widely different estimates of mitigation costs, relative to where heterogeneity is considered. Variation in baseline emissions and the slopes of abatement cost curves between firms renders a differentiated policy less costly than a uniform standard. However, the relative values of these policies are not broadly different, as firms required to do the most abatement intensive farms with large baseline pollutant loads can do so more cheaply, on average. |
Cost and environmental efficiency of rice farms in South Korea (2012) 🗎🗎 | We examine cost and nutrient use efficiency of farms and determine the cost to move farms to nutrient-efficient operation using Data Envelopment Analysis (DEA) with a dataset of 96 rice farms in Gangwon province of South Korea from 2003 to 2007. Our findings show that improvements in technical efficiency would result in both lower production costs and better environmental performance. It is, however, not costless for farms to move from their current operation to the environmentally efficient operation. On average, this movement would increase production costs by 119% but benefit the water system through an approximately 69% reduction in eutrofying power (EP). The average estimated cost of each EP kg of aggregate nutrient reduction is approximately one thousand two hundred won. For technically efficient farms, there is a trade-off between cost and environmental efficiency. We also find that the environmental performance of farms varies across farms and regions. We suggest that agri-environmental policies should be (re)designed to improve both cost and environmental performance of rice farms. |
Does the Coase theorem hold in real markets? An application to the negotiations between waterworks and farmers in Denmark (2012) 🗎🗎 | The Coase theorem depends on a number of assumptions, among others, perfect information about each other's payoff function, maximising behaviour and zero transaction costs. An important question is whether the Coase theorem holds for real market transactions when these assumptions are violated. This is the question examined in this paper. We consider the results of Danish waterworks' attempts to establish voluntary cultivation agreements with Danish farmers. A survey of these negotiations shows that the Coase theorem is not robust in the presence of imperfect information, non-maximising behaviour and transaction costs. Thus, negotiations between Danish waterworks and farmers may not be a suitable mechanism to achieve efficiency in the protection of groundwater quality due to violations of the assumptions of the Coase theorem. The use of standard schemes or government intervention (e.g. expropriation) may, under some conditions, be a more effective and cost efficient approach for the protection of vulnerable groundwater resources in Denmark. (C) 2011 Elsevier Ltd. All rights reserved. |
Moral Hazard, Targeting and Contract Duration in Agri-Environmental Policy (2012) 🗎🗎 | This article extends the multi-period agri-environmental contract model of Fraser (Journal of Agricultural Economics, Vol. 55, (2004) pp. 525540) to include a more realistic specification of the inter-temporal penalties for non-compliance, and therefore of the inter-temporal moral hazard problem in agri-environmental policy design. It is shown that a farmer has an unambiguous preference for cheating early over cheating late in the contract period based on differences in the expected cost of compliance. It is then shown how the principal can make use of this unambiguous preference to target monitoring resources intertemporally, and in so doing, to encourage full contract duration compliance. |
Participation of Italian farmers in rural development policy (2013) 🗎🗎 | The aim of this paper is to study farmers participation in rural development policy (RDP) measures. We investigate to what extent regional RDP priorities are driven by regional characteristics and moreover, whether regional-level policy priorities help to explain farmers participation in RDP measures. We estimate a multilevel binary choice model that includes both farm-level and regional-level explanatory variables. We conclude that regional governments select RDP priorities based on the specific features of their region. Regional policy priorities play an important role in explaining farmers participation in agri-environmental schemes but not in measures aimed at improving farmer competitiveness. |
Profitability of Willow Biomass Crops Affected by Incentive Programs (2013) 🗎🗎 | The economics of willow biomass crops are strongly influenced by yield, production, and harvesting costs and the delivered price for biomass. Under current management practices, willow biomass crops with yields of 12 oven-dried metric tons (odt) ha(-1) year(-1) and a delivered price of $60 odt(-1) have an internal rate of return (IRR) of about 5.5 %. Yields below 9 odt ha(-1) year(-1) have an IRR < 0 %. We examined the impact of different incentive programs on the returns from willow biomass crops and the hectares or tons of willow biomass supported across a range of yields. Incentive programs examined included establishment grants (EG), annual payments (AIP), low cost startup loans, and matching payments offered by two existing programs, the Conservation Resource Program (CRP) and more recently the Biomass Crop Assistance Program (BCAP). EGs covering 75 % of the establishment costs provide high returns for growers on medium to high-productivity sites. Stand-alone AIPs with payments of $124 ha(-1) year(-1) paid over 5-15 years had little impact on profitability for growers but were costly for a funding agency. Low-cost loans with an interest rate of 2-4 % are one of the least expensive approaches ($1.3-6.6 odt(-1)) and improve profitability for medium- and high-yielding (8-16 odt ha(-1) year(-1)) sites. A matching payment incentive providing $50 per odt delivered was the only individual incentive approach that made low-yielding sites (6 odt ha(-1) year(-1)) profitable but was costly per odt compared to other incentives. Current CRP incentives made willow profitable across all productivity scenarios. The BCAP program generates higher profits for all productivity scenarios but comes at a higher cost. Effective financial incentives need to be well designed and monitored so that the target audience is reached and the intended policy goals are attained. |
Is participation in agri-environmental programs affected by liquidity and solvency? (2013) 🗎🗎 | Financial constraints, both in the short and long run, have an impact on economic well-being of farm families. Additionally, financial constraints have an impact on production efficiency and technology adoption. This study investigates factors affecting farmers' participation in the agri-environmental programs like Conservation Reserve Program (CRP) and the Environmental Quality Incentives Programs (EQIPs) in the U.S. particular attention is given to the roles of liquidity and solvency on participation in CRP and EQIP. Results show that both liquidity and solvency have a negative impact on participation in such programs. Additionally, we found that access to the Internet plays an important role in the farmer's decision to participate in CRP and EQIP. Our results also suggested that beginning farmers are more likely to participate in EQIP program. (C) 2013 Elsevier Ltd. All rights reserved. |
Maintaining environmental quality while expanding biomass production: Sub-regional US policy simulations (2013) 🗎🗎 | This paper evaluates environmental policy effects on ligno-cellulosic biomass production and environmental outcomes using an integrated bioeconomic optimization model. The environmental policy integrated climate (EPIC) model is used to simulate crop yields and environmental indicators in current and future potential bioenergy cropping systems based on weather, topographic and soil data. The crop yield and environmental outcome parameters from EPIC are combined with biomass transport costs and economic parameters in a representative farmer profit-maximizing mathematical optimization model. The model is used to predict the impact of alternative policies on biomass production and environmental outcomes. We find that without environmental policy, rising biomass prices initially trigger production of annual crop residues, resulting in increased greenhouse gas emissions, soil erosion, and nutrient losses to surface and ground water. At higher biomass prices, perennial bioenergy crops replace annual crop residues as biomass sources, resulting in lower environmental impacts. Simulations of three environmental policies namely a carbon price, a no-till area subsidy, and a fertilizer tax reveal that only the carbon price policy systematically mitigates environmental impacts. The fertilizer tax is ineffectual and too costly to farmers. The no-till subsidy is effective only at low biomass prices and is too costly to government. (C) 2013 Elsevier Ltd. All rights reserved. |
Global climate policy impacts on livestock, land use, livelihoods, and food security (2013) 🗎🗎 | Recent research has shed light on the cost-effective contribution that agriculture can make to global greenhouse gas abatement; however, the resulting impacts on agricultural production, producer livelihoods, and food security remain largely unexplored. This paper provides an integrated assessment of the linkages between land-based climate policies, development, and food security, with a particular emphasis on abatement opportunities and impacts in the livestock sector. Targeting Annex I countries and exempting non-Annex I countries from land-based carbon policies on equity or food security grounds may result in significant leakage rates for livestock production and agriculture as a whole. We find that such leakage can be eliminated by supplying forest carbon sequestration incentives to non-Annex I countries. Furthermore, substantial additional global agricultural abatement can be attained by extending a greenhouse gas emissions tax to non-Annex I agricultural producers, while compensating them for their additional tax expenses. Because of their relatively large emissions intensities and limited abatement possibilities, ruminant meat producers face the greatest market adjustments to land-based climate policies. We also evaluate the impacts of climate policies on livelihoods and food consumption in developing countries. In the absence of non-Annex I abatement policies, these impacts are modest. However, strong income and food consumption impacts surface because of higher food costs after forest carbon sequestration is promoted at a global scale. Food consumption among unskilled labor households falls but rises for the representative farm households, because global agricultural supplies are restricted and farm prices rise sharply in the face of inelastic food demands. |
Awareness and pro-active adoption of surface water BMPs (2013) 🗎🗎 | Beef cow operators were surveyed to determine the effect of cost-share awareness and farm management characteristics on the adoption of surface water best management practices (BMPs) in a state without defined BMPs. Results demonstrated that farm management characteristics determined nutrient management adoption, farm characteristics determined filter strip adoption, and human capital and farm characteristics played the largest role with streambank fencing adoption. Cost-share awareness was not found to increase the probability of adopting any BMPs and Extension education was found to positively and significantly increase the adoption of all three BMPs. (C) 2013 Elsevier Ltd. All rights reserved. |
Cost-oriented evaluation of ecosystem services under consideration of income risks and risk attitudes of farmers (2013) 🗎🗎 | Agri-environmental measures are often not as accepted among farmers as is expected. The present study investigates whether changes in income risks and the individual risk attitudes of farmers may constitute an explanatory approach for the low acceptance of the measures. For this purpose, a normative model is developed that calculates the premia claimed by the farmers for adopting environmental measures under the consideration of income risks and different risk attitudes. We apply this model to environmental measures aiming at an increase of the faunistic diversity of species on grassland and showing that changes in income risks and the decision makers' risk attitudes can significantly influence farmers' minimum compensation claims. (C) 2013 Elsevier Ltd. All rights reserved. |
Cost-effective strategies to mitigate multiple pollutants in an agricultural catchment in North Central Victoria, Australia (2013) 🗎🗎 | Strategies to reduce phosphorus and sediment yields are identified for two Australian catchments using a nonlinear optimisation model. This provides novel insight into the cost-effective management of dual pollutants of water courses in Australia. A strong degree of complementarity between the two pollutants is highlighted, given the adsorption of phosphorus to sediment that augments the value of gully and streambank management for mitigation. However, the relationship between the two pollutants is asymmetric. A 30 per cent reduction in phosphorus yield achieves a 75 per cent reduction in sediment yield in one catchment, while a 30 per cent reduction in sediment yield achieves only a 12 per cent reduction in phosphorus yield. Sediment abatement costs are low given the efficiency of gully and streambank management. A 30 per cent phosphorus reduction lowers profit by 3-7 per cent, while a 30 per cent sediment reduction lowers profit by around 1 per cent. Land-use optimisation requires spatial heterogeneity in land-use and gully/streambank management responses. Overall, this research demonstrates the need to determine whether one pollutant is more important than another, while recognising the potential that mitigation practices possess for the reduction of multiple emissions during their evaluation. |
Integrated regional impact assessment of agricultural trade and domestic environmental policies (2013) 🗎🗎 | It remains challenging to derive general findings and conclusions from either economic theory or empirical studies on the relationship between international trade and the regional environment. Consequently, we aim to analyse environmental effects of agricultural trade policies in the Austrian Marchfeld region. We apply an integrated modelling framework that accounts for heterogeneity in agricultural production and environmental outcomes. Scenario analysis is applied to assess regional impacts of different trade policy scenarios. Sensitivity analyses reveal the relative influence of model parameters on outputs. The results indicate that lower domestic tariffs have small beneficial effects on the regional environment. The regional environmental impacts highly depend on the changes in world crop prices through global trade agreements. A laissez-faire market scenario that includes the elimination of trade barriers and agri-environmental payments (AEPs) leads to substantial environmental deterioration. Hence, the alignment of AEPs with WTO trading rules remains an important issue in the trade and environment debate. (c) 2013 Elsevier Ltd. All rights reserved. |
Analysing Dutch dairy farmer behaviour towards the provision of public goods: The added value of an economic simulation experiment (2013) 🗎🗎 | The objective of this paper is to examine the value of experiments for assessing the impact of the proposed Common Agricultural Policy of 2013 on farm income and farming strategies. We focus specifically on the impact of an alternative direct payment system based on a flat rate and green payments. We show the added value of an economic simulation experiment to existing economic micro- and sector modeling analysis when analyzing farmer behavior. It is shown that the suitability of and rewards for the provision of green services play a significant role in their uptake by farmers and the support for them. These results are useful in implementing a revised direct payments system in the Netherlands for the future. (C) 2013 Elsevier Ltd. All rights reserved. |
Measurement of greenhouse gas emissions from agriculture: economic implications for policy and agricultural producers (2013) 🗎🗎 | If agriculture were to be included in Australia's carbon price scheme, a key decision for government would be how to estimate greenhouse gas emissions. We explore the consequences of three different methods for measuring on-farm emissions: national accounting methods, an amended version of those methods and use of best-available local data. Estimated emissions under the three methods can vary widely; for example, on a case study farm in Western Australia, local data indicated 44 per cent lower emissions than did the national accounts method. If on-farm emissions are subject to an emissions price, the impact on farm profit is large and varies considerably with different measurement methods. For instance, if a price of $23/t of CO2-e applies then farm profit falls by 14.430.8 per cent depending on the measurement method. Thus, the choice of measurement method can have large distributional consequences. On the other hand, inaccurate measurement results in relatively minor deadweight losses. On-farm sequestration through reafforestation may lessen the impact of an emissions price on farm businesses, although it will require a high carbon price to be viable, especially if sequestration rates are underestimated or low. |
Hemp: A more sustainable annual energy crop for climate and energy policy (2013) 🗎🗎 | The objective of this study was to compare the fuel-chain greenhouse gas balance and farm economics of hemp grown for bioenergy with two perennial bioenergy crops, Miscanthus and willow, and two more traditional annual bioenergy crops, sugar beet and oil seed rape (OSR). The GHG burden of hemp cultivation is intermediate between perennial and traditional annual energy crops, but net fuel chain GHG abatement potential of 11 t/CO2 eq./ha/year in the mid yield estimate is comparable to perennial crops, and 140% and 540% greater than for OSR and sugar beet fuel chains, respectively. Gross margins from hemp were considerably lower than for OSR and sugar beet, but exceeded those from Miscanthus when organic fertilizers were used and in the absence of establishment grants for the latter crop. Extrapolated up to the EU scale, replacing 25% of OSR and sugar beet production with hemp production could increase net GHG abatement by up to 21 Mt CO(2)eq./year. Hemp is a considerably more efficient bioenergy feedstock than the dominant annual energy crops. Integrated into food crop rotations, hemp need not compete with food supplies, and could provide an appealing option to develop more sustainable non-transport bioenergy supply chains. (c) 2013 Elsevier Ltd. All rights reserved. |
Moving Pollution Trading from Air to Water: Potential, Problems, and Prognosis (2013) 🗎🗎 | This paper seeks to assess the current status of water quality trading and to identify possible problems and solutions. Water pollution permit trading programs have rarely been comprehensively described and analyzed in the peer-reviewed literature. Including active programs and completed or otherwise inactive programs, we identify approximately three dozen initiatives. We describe six criteria for successful pollution trading programs and consider how these apply to standard water quality problems, as compared to air quality. We then highlight some important issues to be resolved if current water quality trading programs are to function as the "leading edge" of a new frontier in cost-effective pollution permit trading in the United States. |
Agri-environmental policies for biodiversity when the spatial pattern of the reserve matters (2013) 🗎🗎 | The aim of this paper is to compare different environmental policies for cost-effective habitat conservation on agricultural lands, when the desired spatial pattern of reserves is a random mosaic. We use a spatially explicit mathematical programming model which studies the farmers' behavior as profit maximizers under technical and administrative constraints. Facing different policy measures, each farmer chooses the land-use on each field, which determines the landscape at the regional level. A spatial pattern index (Ripley L function) is then associated to the obtained landscape, indicating on the degree of dispersion of the reserve. We compare a subsidy per hectare of reserve with an auction scheme and an agglomeration malus. We find that the auction is superior to the uniform subsidy for cost-efficiency. The agglomeration malus does better than the auction for the spatial pattern but is more costly. (C) 2012 Elsevier B.V. All rights reserved. |
How much green for the buck? Estimating additional and windfall effects of French agro-environmental schemes by DID-matching (2013) 🗎🗎 | Agro-environmental schemes (AES), which pay farmers to adopt greener practices, are increasingly important components of environmental and agricultural policies both in the US and the EU. Here we study the French implementation of the EU AES program. We estimate additional and windfall effects of five AESs for a representative sample of individual farmers using difference-in-difference (DID) matching. We derive the statistical assumptions underlying DID-matching from a structural household model and we argue that the economics of the program make it likely that these assumptions hold in our data. We test the implications of the identifying assumptions, provide a lower bound using triple-difference matching, test for crossover effects and insert our estimates of both additionality and windfall effects into a cost-benefit framework. We find that the AESs promoting crop diversity have inserted one new crop into the rotation but on a small part of the cropped area. We also find that the AES subsidizing the planting of cover crops has increased cover crops by 10 ha on the average recipient farm at the expense of almost 7 ha of windfall effect. This AES does not appear to be cost effective. In contrast, we find that the AES subsidizing grass buffer strips could be socially efficient despite large windfall effects. We finally estimate that the AES subsidizing conversion to organic farming has low windfall effects and high additionality. (c) 2012 Elsevier Inc. All rights reserved. |
Agri-environment policy in an era of lower government expenditure: CAP reform and conservation payments (2013) 🗎🗎 | Governments are seeking to reduce levels of expenditure. In the reform of the Common Agricultural Policy (CAP) it will be important to deliver the environmental objectives of agricultural policy more cost-effectively. This paper reviews the different agri-environmental mechanisms and their relative scale and performance. Likely reductions in the Single Farm Payment (SFP) imply a need to shift resources from payments for the reduction of intensity towards payments to prevent abandonment. More cost-effective policies may be achieved by shifting funds from the SFP into more targeted mechanisms, changing standards currently achieved by cross-compliance into regulations, and increasing targeting and competitive allocation mechanisms. |
Proposed Smart Market Design for Sediment Discharge (2013) 🗎🗎 | Sediment discharge from erosion, urban runoff, and construction can cause environmental degradation. Governments try to regulate sediment, but the regulatory approach is costly to land owners. In principle, a market-based system could reduce costs, but the associated transaction costs are far too high, because market participants must find trading partners, negotiate, and seek government approval. This paper proposes a smart market design with an associated market clearing model for sediment discharge. Market participants offer and bid for tradable discharge allowances to a central auctioneer. The allowances correspond to kilograms of sediment discharge per year, as estimated by an erosion model. The auctioneer then uses a linear program to price and allocate sediment allowances in a given catchment. Participants do not trade bilaterally, but rather through a central pool, reducing transaction costs. The market design uses the relevant hydrological data, quantifies environmental effects explicitly, and gives price signals based on the environmental features. Additionally, the initial rights could be scaled back or up when catchment is over-allocated or under-allocated to keep a market operating with revenue neutrality. The smart market is simulated for two catchments in Auckland, New Zealand. DOI: 10.1061/(ASCE)WR.1943-5452.0000228. (C) 2013 American Society of Civil Engineers. |
Farmers' adoption of extensive wheat production - Determinants and implications (2013) 🗎🗎 | Using farm-level panel data, we analyze farmers' adoption decisions with respect to extensive wheat production, which is supported in Switzerland since 1992 with an ecological direct payment scheme. It shows that in particular farms with a small area under wheat, low levels of input use and low wheat yields adopted extensive wheat production in the first phase of the programme. If later adoption phases are included in a duration analysis, the difference in wheat area between adopters and non-adopters vanish. However, the level of wheat yields and input use still tend to be lower for adopters. Hence, less intensive producing farms (with lower yield levels) are much more likely to adopt extensive wheat production, which indicates free-riding effects. In contrast, more intensively producing farms, i.e. those farms that may actually harm the environment, usually not adopt extensive wheat production. Thus, aggregated environmental effects of this programme may not reach its full potential and the effectiveness of voluntary participation in agri-environmental programmes should be re-considered. Moreover, we find that changes in wheat prices and the ecological direct payment significantly influenced adoption decisions. (C) 2012 Elsevier Ltd. All rights reserved. |
Evaluation of cost-effectiveness of organic farming support as an agri-environmental measure at Swiss agricultural sector level (2013) 🗎🗎 | The economic efficiency of financial support of organic farming has been questioned by economists and policy makers. However, little empirical research has been done in order to evaluate the economic performance of these payments. Thus, the aim of this paper is to calculate the cost-effectiveness of organic farming support in achieving environmental policy targets compared to other agri-environmental measures. The cost-effectiveness of agri-environmental measures can be understood as a function of policy uptake, environmental effects, and public expenditure. Taking the Swiss agricultural sector as an empirical case study, cost-effectiveness of organic farming support and other single agri-environmental measures was calculated. For this purpose, the sector-representative PMP model FARMIS was extended by three modules encompassing: (a) life cycle assessments for fossil energy use, biodiversity and eutrophication according to the SALCA methodology, (b) public expenditure, including policy-related transaction costs, and (c) uptake of agri-environmental measures. The calculations revealed a slightly higher policy cost with organic farming support of 14 CHF/ha for a 1% average improvement in the environmental indicators, compared to a combination of three single agri-environmental measures (11 CHF/ha), including both extensification of arable land and meadows. In view of an average public expenditure on agriculture of 2.5 kCHF/ha in Switzerland, these differences can be considered as marginal. Sensitivity analyses confirm that the cost-effectiveness of organic farming support is very similar to combined agri-environmental measures. Furthermore, the model reveals that the cost-effectiveness of specific agri-environmental measures is higher when implemented on organic farms rather than on non-organic farms. (C) 2012 Elsevier Ltd. All rights reserved. |
Social legitimacy issues in the provision of non-commodity outputs from Rural Development Programs (2013) 🗎🗎 | This article deals with the issues of welfare measurement and preference heterogeneity for Rural Development Programs (RDPs) in Cantabria, Spain. People from urban and rural localities would benefit from improvements in the provision of public goods and externalities promoted by RDPs, but their preferences may be quite different. Heterogeneous preferences between urban and rural dwellers would hinder the proper estimation and aggregation of social welfare. Results show significant differences between rural and urban residents. However, the social legitimacy of RDPs, in terms of positive welfare changes, would prevail in both rural and urban settings. The article concludes that accurately measuring social welfare values and explaining preference patterns is a key issue for developing effective multifunctional policies. (c) 2013 Elsevier Ltd. All rights reserved. |
A micro-simulation evaluation of the effectiveness of an Irish grass roots agri-environmental scheme (2013) 🗎🗎 | Agri-environmental schemes designed to induce agricultural producers to provide environmental public goods must increasingly justify exchequer costs. This requires comparing the non-market value of amenity externalities with government expenditures. We employ a preference calibrated micro-simulation model to analyze the economic viability of a grass roots agri-environment scheme in the West of Ireland. We also simulate the land-use response of individual producers to variations in program funding and market conditions. Our results indicate that heterogeneous preferences crucially influence producers' decisions to provide environmental public goods; producers are highly sensitive to market and policy incentives, in particular to semi-organic product price premia, off-farm labor market conditions, and subsidy payments; and finally, even in the most unfavorable simulated market conditions, support payments provide a rate of return exceeding 71% and in current conditions provide returns as high as 185%. (C) 2012 Elsevier Ltd. All rights reserved. |
The potential to reduce the risk of diffuse pollution from agriculture while improving economic performance at farm level (2013) 🗎🗎 | Within the constraints of the EU Nitrates and Water Framework Directives, controlling and managing nutrient transfers to water from excessive nutrient use on agricultural land is a significant environmental policy challenge. This paper assesses whether there is room to reduce inorganic nitrogen and phosphorus fertiliser applications and imported feeds by exploring the extent to which application rates may have exceeded optimum levels using data envelopment analysis methodology. The investigation concentrates on specialist dairy and tillage farms in the Republic of Ireland stratified by land use potential as these agricultural systems are the most intensive and may pose the greatest risk in terms of managing nutrient transfers from agricultural land to water bodies. Results demonstrate inefficiency in the utilisation of nitrogen and phosphorus fertilisers across these systems. Second stage regression analysis indicates significant return to efficiency from agricultural education. Average over application of chemical fertilizers ranged from 22.8 to 32.8 kg N ha(-1) and 2.9 to 3.51 kg P ha(-1) in 2008 which research has shown is at least similar and greater than losses to leaching and runoff for N and P, respectively, from similar intensive agricultural land uses. Potential cost savings on chemical fertilisers across all systems on average ranged from (sic)38.9 ha(-1) to (sic)48.5 ha(-1). Additionally, potential cost reductions on imported feeds of (sic)65-84 per livestock were indicated for dairy farms versus efficient cohort benchmark farms. Average excess of imported feedstuffs equated to 5.82-7.44 kg LU-1 of N and 0.92-1.17 kg LU-1 of P. Such reductions have the potential to deliver a double dividend by reducing the risk of diffuse nutrient losses from agricultural land while improving economic margins at farm level. (C) 2012 Elsevier Ltd. All rights reserved. |
Evaluation of agri-environmental policies for reducing nitrate pollution from New Zealand dairy farms accounting for firm heterogeneity (2013) 🗎🗎 | Policy makers worldwide are interested in the identification of cost-effective policy instruments to reduce diffuse pollution. A large economic model representing heterogeneous farms is used to evaluate a broad set of policies for reducing nitrate regulation within a large catchment dominated by dairy production. A policy instrument that allows the level of abatement to vary among producers according to differences in abatement cost is most cost-effective. The primary goal of 26 kg N ha(-1) can be achieved at a cost of $15 ha(-1) under this cap and trade policy, while a uniform cap on emissions for all farmers would be more than three times as expensive ($49 ha(-1)). In contrast, requiring uniform reductions in stocking rate, banning the application of nitrogen fertiliser, and land retirement perform poorly. These instruments are at least three times more costly than a cap and trade policy over all simulated reductions. Moreover, the differentiated policy does not greatly alter the distribution of farm profit, relative to what exists without regulation. The use of a large, complex economic model incorporating disaggregated farms provides unique insight into the economic benefits accruing to a differentiated policy. (C) 2012 Elsevier Ltd. All rights reserved. |
Bio-economic modeling of wine grape protection strategies for environmental policy assessment (2014) 🗎🗎 | This research had two objectives. The first was to model the behaviour of wine producers, and the second was to assess the effectiveness of policies designed to reduce pesticide use in viticulture. We modeled the decisions of producers aiming to maximize their expected income while subject to a number of constraints and phytosanitary risks. We also examined the impacts of different protection strategies targeting downy mildew, the main grape disease in European Atlantic vineyards. The Vineyard model for Environmental Policy Analysis (VINEPA) model is a multi-periodic stochastic programming model based on panel data of about one hundred representative winegrowing farms from the Farm Accountancy Data Network in the Bordeaux region. The response of vines to fungicide treatments against downy mildew was simulated through the downy mildew potential system, an epidemiologic model initially developed for decision support, using data from multiple weather stations along with special plots of untreated vines, monitored weekly over a 10-year period. The VINEPA model accurately reproduced the current chemical protection strategies in the region. Simulations were then carried out for different types of taxes (ad valorem and volume based) at different rates. In addition, we analysed the effects of policies on spraying practices, along with their potential impact on investment in precision technology equipment. |
Evaluating Greening Farm Policies: A Structural Model for Assessing Agri-environmental Subsidies (2014) 🗎🗎 | This study uses a structural econometric model to evaluate the impacts of support from a European Union agri-environmental program designed to reduce nutrient pollution from agricultural land. Drawing on a representative sample of individual grain farms, we first quantify the effects of agri-environmental payments on farms' decisions on land allocation and on fertilizer use. We then combine the predicted land allocation and fertilizer use with environmental production functions to quantify the impact on nutrient loading. Finally, we assess the monetary value of reduced nutrient pollution, drawing on a recent valuation study. |
Implications of fairness for the design of nitrate leaching policy for heterogeneous New Zealand dairy farms (2014) 🗎🗎 | The implementation of environmental policy may be eased when perceived outcomes are fair. The primary objective of this study is to investigate how the consideration of fairness in policy design affects the cost-effectiveness of instruments aimed at reducing nitrate leaching from heterogeneous dairy farms in New Zealand. The cost-effectiveness of each policy is compared across different levels of leaching restriction and the number of regulated farms. The cost-effectiveness of fair policy alternatives, relative to the least cost outcome, is extremely variable. Accordingly, there is no one fair policy that is the most cost-effective in any situation. Nonetheless, uniform policies that require an equivalent proportional reduction in baseline leaching load or an equivalent absolute level of mitigation are optimal, or close to it, across all simulated levels of N reduction. The implementation of such policies is promoted by their pragmatism, as baseline N loads and the associated abatement levels can be estimated through biophysical modelling. The suitability of fair policies for environmental protection is promoted by an inverse relationship between the amount of N that must be abated and the Cost of Fairness. In contrast to previous theoretical work, this empirical analysis also shows that the cost of a fair policy, relative to a differentiated policy, need not increase as the number of agents affected by a policy rises. (C) 2013 Elsevier B.V. All rights reserved. |
Impact of environmental values on the breakeven price of switchgrass (2014) 🗎🗎 | This study estimates the farm-gate breakeven price of switchgrass relative to wheat in Oklahoma, USA. The breakeven price of switchgrass is determined for two situations: when external consequences are ignored and when the environmental costs of changes in soil erosion, fertilizer (nitrogen and phosphorous) runoff, and soil organic carbon (SOC) are considered. Results suggest that if indirect land use changes are ignored, the farm-gate breakeven price of switchgrass when only the internal costs are considered is 69%-144% greater (depending on land quality) than if the value of selected external consequences are considered. The potential environmental benefits are greater if highly erodible land is switched from annual cropping to switchgrass. (C) 2014 Elsevier Ltd. All rights reserved. |
Technological externalities and environmental policy How to simulate manure management regulation within a DEA framework (2014) 🗎🗎 | The directional distance function defined in a DEA type non-parametric framework provides a highly flexible structure for modelling producer behaviour in the presence of polluting emissions and environmental regulations. This article presents five models describing different "command and control" type policy measures as an economic one about nitrogen pollution of agricultural origin. These measures concern the management of the mandatory constraint on the spreading of organic manure and the investment in manure treatment facilities. The study also simulates the use of an economic instrument by enforcing the individual manure constraint at an aggregated level. Using individual and aggregated DEA models, this paper provides insights into the impact of individual and collective management of environmental policy instruments. |
Encouraging Reductions in Nonpoint Source Pollution through Point-nonpoint Trading: The Roles of Baseline Choice and Practice Subsidies (2014) 🗎🗎 | Water quality regulations in the United States apply almost exclusively to point sources. In impaired watersheds where both point and nonpoint sources contribute to pollution, the U.S. Environmental Protection Agency (EPA) is encouraging the use of point-nonpoint trading to reduce the cost of point sources to meet their permit requirement, and to encourage nonpoint sources to voluntarily contribute more towards meeting overall water quality goals. The EPA guidance encourages trading programs to set a nonpoint source eligibility baseline that extracts some "extra" abatement from nonpoint sources. Research has shown that setting an eligibility baseline that is substantially more stringent than current management could discourage nonpoint source participation and significantly hinder trading. In this paper we examine how choosing the eligibility baseline for agricultural sources affects the efficiency goal of trading (reducing costs to point sources), as well as how it affects the EPA goal of encouraging nonpoint abatement. Using data from the Chesapeake Bay Watershed we find that eligibility baselines set to encourage additional nonpoint source abatement reduce the supply of credits in a market; the more stringent the baseline, the fewer the trades and the smaller the overall abatement from nonpoint sources. A subsidy to farmers for reducing the cost of meeting a baseline encourages greater nonpoint source abatement, but may not benefit the trading market. |
Estimating stocks and flows of nitrogen: Application of dynamic nutrient balance to European agriculture (2014) 🗎🗎 | This study elaborates the dynamic nutrient balance model and applies it to analyze nitrogen use and nitrogen efficiency in agriculture. We use publicly available agricultural production data to estimate the net inflows, stocks and outflows of nitrogen for 14 European countries in years 1961-2009. The dynamic model allows us to analyze the trends in the nitrogen stocks and flows overtime, and break down the total outflow of nitrogen into flows to water, air and soil. We argue that the nitrogen outflow, modeled as the decay of nitrogen stock, provides a more reliable and robust agri-environmental indicator than the conventional nutrient balance. Mathematically, the nutrient balance is an interval scale measure, whereas the nitrogen stock and the outflow from stock are ratio scale measures. Nitrogen efficiencies, calculated based on the nitrogen stocks, provide useful and insightful information beyond the conventional eco-efficiency measures defined from the nitrogen balances. The results of this paper can be used as input data for more comprehensive eco-efficiency or productivity analysis and for the evaluation and design of agri-environmental policies in Europe. (C) 2014 Elsevier B.V. All rights reserved. |
LUMINATE: linking agricultural land use, local water quality and Gulf of Mexico hypoxia (2014) 🗎🗎 | In this paper, we discuss the importance of developing integrated assessment models to support the design and implementation of policies to address water quality problems associated with agricultural pollution. We describe a new modelling system, LUMINATE, which links land use decisions made at the field scale in the Upper Mississippi, Ohio and Tennessee Basins through both environmental and hydrological components to downstream water quality effects and hypoxia in the Gulf of Mexico. This modelling system can be used to analyse detailed policy scenarios identifying the costs of the policies and their resulting benefits for improved local and regional water quality. We demonstrate the model's capabilities with a simple scenario where cover crops are incentivised with green payments over a large expanse of the watershed. |
The role of multi-target policy instruments in agri-environmental policy mixes (2014) 🗎🗎 | The Tinbergen Rule has been used to criticise multi-target policy instruments for being inefficient The aim of this paper is to clarify the role of multi-target policy instruments using the case of agri-environmental policy. Employing an analytical linear optimisation model, this paper demonstrates that there is no general contradiction between multi-target policy instruments and the Tinbergen Rule, if multi-target policy instruments are embedded in a policy-mix with a sufficient number of targeted instruments. We show that the relation between cost-effectiveness of the instruments, related to all policy targets, is the key determinant for an economically sound choice of policy instruments. If economies of scope with respect to achieving policy targets are realised, a higher cost-effectiveness of multi-target policy instruments can be achieved. Using the example of organic farming support policy, we discuss several reasons why economies of scope could be realised by multi-target agri-environmental policy instruments. (C) 2014 Elsevier Ltd. All rights reserved. |
Agri-environmental Policy and Urban Development Patterns: A General Equilibrium Analysis (2014) 🗎🗎 | This paper investigates the spatial effects that the provision of environmental public goods have on residential location choices in a suburban context. Specifically, a spatial general equilibrium framework is developed to analyze the consequences of adopting an agri-environmental policy promoting the provision of positive farming externalities. We use a static monocentric model of an open city where agricultural bid-rents and agricultural amenities vary endogenously in space, and where the positive externalities associated with agricultural production are valued by households. Consistent with empirical evidence of the potential side effects that conservation policies may have in terms of urbanization patterns and land price changes, we show that under certain conditions implementing an agri-environmental policy may promote additional suburban development. Moreover, we demonstrate that the emergence of disconnected suburban areas may be significantly influenced by the location of land regulated by an agri-environmental policy. Finally, we discuss distributional aspects and show that while introducing an agri-environmental policy has a negative impact on most residential land value, it can have positive effects on farmland and residential land located within the regulated areas, suggesting the non-neutrality of such policies regarding the agents' assets. |
Erosive runoff events in the European Union: Using discrete choice experiment to assess the benefits of integrated management policies when preferences are heterogeneous (2014) 🗎🗎 | This paper assesses the value of mitigating erosive runoff events in a severely prone watershed of France using a discrete choice experiment approach. Good farming practices are integrated together with flood protection programs within a common management policy. The inclusion of risk exposure and socio-demographic variables in a random parameter logit model allows accounting for both latent and observed heterogeneity in preferences. Results show substantial benefits for each of the management alternatives valued. Results also identify that preferences significantly vary across respondents which suggests that policy makers should consider heterogeneity in preferences when designing policies for various area profiles in order to closely monitor welfare improvements. (C) 2014 Elsevier B.V. All rights reserved. |
Producer preference for land-based biological carbon sequestration in agriculture: Some implications from a sample of North Dakota farmers (2014) 🗎🗎 | The objective of this study was to develop an understanding of producer preferences for land-based biological carbon (C) sequestration in agriculture. We conducted a mail survey in a US production region to elicit farmers' willingness to participate in different C credit programs in a hypothetical greenhouse gas mitigation market. We used the survey data to calibrate a behavior model in a benefit-cost framework that characterizes farmers' decisions about C program participation in relation to preferences and the attributes of both C programs and production. Our empirical analysis suggested that.(1) producers would respond to the market incentive for C sequestration; (2) producer responses might be limited, particularly at low C prices; and (3) producers might perceive differentially a cost for C sequestration, depending on individual preferences, production attributes, and specific practices to be adopted. A policy simulation of producer behavior with agricultural census data estimated the potential C offset supply in the study area. |
A Regional Bio-economic Model of Nitrogen Use in Cropping (2014) 🗎🗎 | We develop a programming model of crop production to predict the effects of environmental policies on agriculture and the environment. The model is calibrated against acreages, yields, and exogenous supply elasticities following positive mathematical programming. In addition, crop production functions are calibrated to yield elasticities with respect to nitrogen and irrigation obtained from a biogeochemical model. We study the effects of a nitrogen tax in Yolo County, California, intended to mitigate nitrogen pollution from field crops. The behavioral and environmental responses to the tax are largely due to intensive margin adjustments. Sizable reductions in nitrate leaching are achieved at a low social cost. |
The Influence of Biodiversity Provision on the Cost Structure of Swedish Dairy Farming (2014) 🗎🗎 | Multi-functionality and the provision of eco-system services are politically highly prioritised aspects of farming. This study uses a Symmetric Generalised McFadden cost function to analyze the relationship between costs of production and the provision of biodiversity for Swedish milk farms. Biodiversity indicators are based on the number of valuable plant species present at the farm and are modeled as an output in the cost function. The results show that the marginal cost of biodiversity increases with higher provision, and that an increased provision of biodiversity also increases the costs of market commodities such as milk and beef. The upward slope of the marginal cost of biodiversity and its competitive relationship with market goods questions the efficiency of support schemes based on voluntary programmes with a flat-rate per hectare compensation. Instead, the results support targeted environmental policy schemes with zonings and/or the use of biodiversity indicators. |
Modelling interactions between farm-level structural adjustment and a regional economy: A case of the Australian rice industry (2014) 🗎🗎 | Climate change and on-going water policy reforms will likely contribute to on-farm and regional structural adjustment in Australia. This paper gathers empirical evidence of farm-level structural adjustments and integrates these with a regional equilibrium model to investigate sectoral and regional impacts of climate change and recent water use policy on rice industry. We find strong evidence of adjustments to the farming system, enabled by existing diversity in on-farm production. A further loss of water with additional pressures to adopt less intensive and larger-scale farming, will however reduce the net number of farm businesses, which may affect regional rice production. The results from a regional CGE model show impacts on the regional economy over and above the direct cost of the environmental water, although a net reduction in real economic output and real income is partially offset by gains in rest of the Australia through the reallocation or resources. There is some interest within the industry and from potential new corporate entrants in the relocation of some rice production to the north. However, strong government support would be crucial to implement such relocation. (C) 2013 Elsevier Ltd. All rights reserved. |
From Population Viability Analysis to Coviability of Farmland Biodiversity and Agriculture (2014) 🗎🗎 | Substantial declines in farmland biodiversity have been reported in Europe for several decades. Agricultural changes have been identified as a main driver of these declines. Although different agrienvironmental schemes have been implemented, their positive effect on biodiversity is relatively unknown. This raises the question as to how to reconcile farming production and biodiversity conservation to operationalize a sustainable and multifunctional agriculture. We devised a bioeconomic model and conducted an analysis based on coviability of farmland biodiversity and agriculture. The coviability approach extended population viability analyses by including bioeconomic risk. Our model coupled stochastic dynamics of both biodiversity and farming land-uses selected at the microlevel with public policies at the macrolevel on the basis of financial incentives (taxes or subsidies) for land uses. The coviability approach made it possible for us to evaluate bioeconomic risks of these public incentives through the probability of satisfying a mix of biodiversity and economic constraints over time. We calibrated the model and applied it to a community of 34 common birds in metropolitan France at the small agricultural regions scale. We identified different public policies and scenarios with tolerable (0-0%) agroecological risk and modeled their outcomes up to 2050. Budgetary, economic, and ecological (based on Farmland Bird Index) constraints were essential to understanding the set of viable public policies. Our results suggest that some combinations of taxes on cereals and subsidies on grasslands could be relevant to develop a multifunctional agriculture. Moreover, the flexibility and multicriteria viewpoint underlying the coviability approach may help in the implementation of adaptive management. |
Environmental efficiency and the impact of regulation in dryland organic vine production (2014) 🗎🗎 | Organic agriculture figures prominently in the policies adopted by the EU to improve the environmental impact of agriculture. It may also potentially provide other benefits such as high-quality, health-enhancing food products and advancements in rural development. Recent years have brought new research to assess the environmental and economic implications of organic conversion. Economic efficiency comparisons between organic and conventional farms have been extended to include environmental performance. The inclusion of this variable in efficiency analysis may be useful when assessing the potential impact of suggestions to improve environmental regulations and policies. This paper applies the environmental efficiency model to the analysis of different technologies and calculates productivity and efficiency with and without environmental impacts. In the empirical part of the paper Data Envelopment Analysis (DEA) and bootstrap techniques are applied to detect and measure differences between organic and conventional agriculture aggregate efficiency and productivity in a sample of vineyard farms operating in semiarid, non-irrigated conditions in Navarre (Spain), taking farms' nitrogen surplus and pesticide toxicity indicators to consideration. The results for these particular agronomic conditions suggest that organic agriculture is more environmentally efficient than conventional agriculture in dryland farming, in that it achieves a more favorable production to environmental impact ratio. Nevertheless, conversion to organic production methods for extensive vine cultivation under arid conditions does not guarantee substantial environmental gains, since the organic farms in our sample do not display inferior levels of pollution emissions per unit input as extensive conventional production. The overall environmental efficiency of organic farming is largely attributable to the fact that organic farms come closer to the frontier of their own technology. We find no significant technological differences in environmental productivity, however. In terms of policy implications, these findings suggest that the tightening of specific environmental restrictions in organic standards should involve consideration of technological differences in environmental productivity between organic and other alternative technologies. If organic technology is less productive, more restrictive regulation could undermine the economic viability of farms, and thus undermine the other benefits of organic farming. The results also indicate that, at the local level, it could be convenient to address part of organic subsidies to further improvements in the control of pollution from fertilizers and pesticides. (C) 2013 Elsevier Ltd. All rights reserved. |
Farm Level Costs of Agri-environment Measures: The Impact of Entry Level Stewardship on Cereal Farm Incomes (2014) 🗎🗎 | Applying a difference-in-difference approach with propensity score matching, we examine the impact of participation in the Entry Level Stewardship (ELS) scheme on cereal farm incomes in eastern England. We assess the extent to which impacts are related to a) the source of income affected - whether only from agricultural or total business income; b) the channel of the impact - through land use and/or labour input; and c) the level of impacts through time. In addition, we assess the appropriateness of the level of the ELS payment. We find that: a) entering the ELS scheme could negatively affect cereal farm incomes - in particular, the total business income; b) that negative impacts arise primarily in relation to the use of land resources; c) that impacts may diminish over a relatively short period of time; and d) that the ELS payment broadly compensates for losses without providing over compensation. Given the diminishing negative impact over time, the level of ELS payment might need to be reviewed in the longer term, although policy evaluation should consider the wider implications for efficiency of alternative payment levels. We also discuss some limitations of the approach and potential extensions. |
Climate change and regulation of nitrogen loads under moral hazard (2014) 🗎🗎 | Within the European Union, it is agreed that watershed-based management of water quality problems is more efficient than centralised arrangements. In this study, a mechanism for allocating international funds to watershed authorities for nitrogen abatement in the presence of moral hazard is investigated. The results show that when there is a risk of climate change, the cost of moral hazard to the international funding agency can be high if there is a moderate likelihood of climate change and the watershed authority is guaranteed a high minimum compensation. |
Atrazine, an herbicide used on most of the US corn (maize) crop, is the subject of ongoing controversy, with increasing documentation of its potentially harmful health and environmental impacts. Supporters of atrazine often claim that it is of great value to farmers; most recently, Syngenta, the producer of atrazine, sponsored an "Atrazine Benefits Team" (ABT) of researchers who released a set of five papers in 2011, reporting huge economic benefits from atrazine use in US agriculture. A critical review of the ABT papers shows that they have underestimated the growing problem of atrazine-resistant weeds, offered only a partial review of the effectiveness of alternative herbicides, and ignored the promising option of non-chemical weed management techniques. In addition, the most complete economic analysis in the ABT papers implies that withdrawal of atrazine would lead to a decrease in corn yields of 4.4% and an increase in corn prices of 8.0%. The result would be an increase in corn growers' revenues, equal to US$ 1.7 billion annually under ABT assumptions. Price impacts on consumers would be minimal: at current levels of ethanol production and use, gasoline prices would rise by no more than US$0.03 per gallon; beef prices would rise by an estimated US$0.01 for a 4-ounce hamburger and US$0.05 for an 8-ounce steak. Thus withdrawal of atrazine would boost farm revenues, while only changing consumer prices by pennies. | |
An investigation into the type of farmer who chose to participate in Rural Environment Protection Scheme (REPS) and the role of institutional change in influencing scheme effectiveness (2014) 🗎🗎 | This paper examines the voluntary aspect of the Rural Environment Protection Scheme (REPS) in Ireland by modelling the type of farmer who chose to participate in the agri-environment programme from 1995 to 2010. The impact of changing scheme payment rates and organic nitrogen restrictions on scheme uptake are also examined. In order to examine some of the heterogeneity of variable influence on participation across the different phases of REPS, separate models for each of the four phases were ran (one for a reference year in each phase). Results from the random effects model show that the type of farmer who was most likely to participate in REPS over time had an extensive farm system, low income and spent more hours working on-farm than their non-REPS counterparts. Single year logit model results were compared to the random effects panel logit model for the entire sample period. The results suggest that the individual year models do a better job in demonstrating how farmers responded to contractual changes in the scheme over time (in terms of their participation decision) compared to the panel model. (c) 2014 Elsevier Ltd. All rights reserved. |
A response to Doole and Marsh (2013) article: methodological limitations in the evaluation of policies to reduce nitrate leaching from New Zealand agriculture (2014) 🗎🗎 | A recent paper by Doole and Marsh (2013), questioned the validity of using the New Zealand Forest and Agriculture Regional Model (NZFARM) for New Zealand agri-environmental policy analysis. We respond to their critique by clearly describing the model structure, explaining the NZFARM parameterisation, calibration, and validation procedure, and presenting estimates from a series of nutrient reduction policy scenarios to highlight the utility of the model. In doing so, we demonstrate that NZFARM generates logical and intuitive results that can be used for robust agri-environmental policy decision-making. |
Can Non-point Phosphorus Emissions from Agriculture be Regulated Efficiently Using Input-Output Taxes? (2014) 🗎🗎 | In many parts of Europe and North America, phosphorus loss from cultivated fields is threatening natural ecosystems. Though there are similarities to other non-point agricultural emissions like nitrogen that have been studied extensively, phosphorus is often characterized by the presence of large stocking capacities for phosphorus in farm soils and long time-lags between applications and emission. This makes it important to understand the dynamics of the phosphorus emission problem when designing regulatory systems. Using a model that reflects these dynamics, we evaluate alternative regulatory systems. Depending on the proportions of different types of farms in the agricultural sector, we find that an input-output tax system can be the core element of a close to efficient regulatory policy. |
Effects of an environmental tax on meat and dairy consumption in Sweden (2015) 🗎🗎 | This study evaluated the environmental impacts of introducing an environmental tax on meat and dairy consumption in Sweden. Three meat products (beef, pork and chicken), four dairy products (milk, fermented products, cream and cheese) and four pollutants generating environmental damage (greenhouse gases (GHG), nitrogen, ammonia and phosphorus) were included in the analysis. The unit tax applied corresponded to between 8.9% and 33.3% of the respective price per kg product in 2009. Consumer response to the tax was calculated by econometric estimates of the almost ideal demand system (AIDS) for meat and dairy products, using per capita consumption data and prices. The results indicated relatively inelastic own price elasticities and high income elasticities for all meat products and slightly lower for dairy products. Simultaneous introduction of a tax on all seven products decreased emissions of GHG, nitrogen, ammonia and phosphorus from the livestock sector by up to 12%. (C) 2015 Elsevier Ltd. All rights reserved. |
Searching for solutions to mitigate greenhouse gas emissions by agricultural policy decisions - Application of system dynamics modeling for the case of Latvia (2015) 🗎🗎 | European Union (EU) Member States have agreed to limit their greenhouse gas (GHG) emissions from sectors not covered by the EU Emissions Trading Scheme (non-ETS). That includes also emissions from agricultural sector. Although the Intergovernmental Panel on Climate Change (IPCC) has established a methodology for assessment of GHG emissions from agriculture, the forecasting options are limited, especially when policies and their interaction with the agricultural system are tested. Therefore, an advanced tool, a system dynamics model, was developed that enables assessment of effects various decisions and measures have on agricultural GHG emissions. The model is based on the IPCC guidelines and includes the main elements of an agricultural system, i.e. land management, livestock farming, soil fertilization and crop production, as well as feedback mechanisms between the elements. The case of Latvia is selected for simulations, as agriculture generates 22% of the total anthropogenic GHG emissions in the country. The results demonstrate that there are very limited options for GHG mitigation in the agricultural sector. Thereby, reaching the non-ETS GHG emission targets will be very challenging for Latvia, as the level of agricultural GHG emissions will be exceeded considerably above the target levels. Thus, other non-ETS sectors will have to reduce their emissions drastically to "neutralize" the agricultural sector's emissions for reaching the EU's common ambition tomove towards low-carbon economy. The developed model may serve as a decision support tool for impact assessment of various measures and decisions on the agricultural system's GHG emissions. Although the model is applied to the case of Latvia, the elements and structure of the model developed are similar to agricultural systems in many countries. By changing numeric values of certain parameters, the model can be applied to analyze decisions and measures in other countries. (C) 2015 Elsevier B.V. All rights reserved. |
Confronting tipping points: Can multi-objective evolutionary algorithms discover pollution control tradeoffs given environmental thresholds? (2015) 🗎🗎 | This study contributes a stochastic, multi-objective adaptation of the classic environmental economics Lake Problem as a computationally simple but mathematically challenging benchmarking problem. The Lake Problem considers a hypothetical town by a lake, which hopes to maximize its economic benefit without crossing a nonlinear, and potentially irreversible, pollution threshold. Optimization objectives are maximize economic benefit, minimize phosphorus in the lake, maximize the probability of avoiding the pollution threshold, and minimize the probability of drastic phosphorus loading reductions in a given year. Uncertainty is introduced through a stochastic natural phosphorus inflow. We performed comprehensive diagnostics using six algorithms: the Borg multi-objective evolutionary algorithm (MOEA), MOEA/D, epsilon-MOEA, the Non-dominated Sorting Genetic Algorithm II (NSGAII), epsilon-NSGAII, and Generalized Differential Evolution 3 (GDE3) to evaluate their controllability, reliability, efficiency, and effectiveness. Our results show only the self-adaptive search of the Borg MOEA was capable of performing well on this nontrivial benchmarking problem. (C) 2015 Elsevier Ltd. All rights reserved. |
Impact of economic growth and population on agrochemical use: evidence from post-liberalization India (2015) 🗎🗎 | This paper analyzes the impact of population and per capita income on agrochemical use in India. Traditionally, few researchers have used I = PAT equation in its original form to study the impact of population and per capita income on agrochemical use. In this paper, a variant of I = PAT is used which relates per capita income and per hectare population with per hectare agrochemical use. The sample covers the period 1990-2008 for 25 Indian states. Our results suggest that per capita income has a nonlinear relationship with per hectare agrochemical use. Observed negative relationship between pesticide use per hectare and persons per hectare is indicative of public awareness regarding harms related with intensive use of pesticides; however, a positive relationship between fartilizer consumption per hectare and population pressure, found here, reiterates importance of fertilizers for food security. An examination into dematerialization of agriculture is also carried out at all India level which indicates that declining intensity of fertilizer and pesticide use in post-1990 period is mainly attributed to structural change in the economy. In summary, the paper concludes that India needs environment friendly agriculture policies and rural infrastructure to manage agriculture-related environmental problems. |
Uniform-Price Reverse Auction for Estimating the Costs of Reducing Open-Field Burning of Rice Residue in Nepal (2015) 🗎🗎 | This paper describes the design, implementation and results of a uniform-price reverse auction and real payment system to incentivize the avoidance of open-field burning of rice straw by smallholder farmers in Nepal. The main objective of the study was to reveal the private costs to farmers of avoiding rice straw burning. The study used survey and auction data from a sample of 317 farmers from 18 villages in Southern Nepal. Using a sealed bid one-shot reverse auction a level of payment was determined at which farmers would find acceptable to not engage in residue burning. Based on the bid amount, 167 winner farmers were enrolled in a real payment programme. The results revealed that 86 % of the farmers complied with the programme to refrain from burning rice straw with an average payment of US$ 78.76/ha of paddy farm, which represents US$ 13.17/ton of of emissions. To identify the policy variables, linear and log-linear regressions were fitted with the bid amount using socioeconomic variables. Land area, farmer education, practice of joint household decision making, wage rate for farm labour and straw yield increased the bid amount. The design and methods of field implementation of the reverse auction gave useful information for the advancement of conservation auctions and their replication in developing countries. |
Economics of Antibiotic Growth Promoters in Livestock (2015) 🗎🗎 | Rapidly rising incomes are driving demand for animal protein and livestock globally. The move toward more intensive production systems to support this increased demand is projected to increase the dependence on antibiotic growth promoters. The volume of antibiotics used for growth promotion in livestock outstrips that used for disease treatment in humans and creates significant selection pressure for the evolution of antibiotic resistance-a challenge for global health and resource conservation. This review describes the benefits and costs of antibiotic growth promoters in livestock and considers the prospects for more fully accounting for the externality costs. |
Private transaction costs of participation in water quality improvement programs for Australia's Great Barrier Reef: Extent, causes and policy implications (2015) 🗎🗎 | The direct private cost to landholders of participating in programs that result in improved farming activities (IFAs) is generally well understood. However, the private indirect or transaction costs, such as the cost of a landholder's time and the expense to learn about IFAs and apply for assistance to implement these changes on-farm, are not so well understood. Where these have been studied, they have been shown to be extensive. We assess the extent and causes of private transaction costs incurred by sugarcane growers participating in the Australian Government's Reef Rescue scheme which pays farmers to adopt environmentally beneficial farm management practices. Utilising a mail-out-mail-back survey of 110 growers, we found that the average total transaction cost per farm of participating in the program was AU$8389. The average total transaction costs per farm as a percentage of the average funding provided was 38 per cent. We also assessed which type of improved farming activity (soil, nutrient, pest or water management) generated the greatest transaction costs and how landholder characteristics such as bounded rationality, opportunism and social connection impacted on the extent of transaction costs. |
Multi-stage linear programming model for optimizing cropping plan decisions under the new Common Agricultural Policy (2015) 🗎🗎 | The new European Union's Common Agricultural Policy will cover the period from 2015 to 2020. Significant novelties in the payment scheme have been introduced which may potentially encourage farmers to implement changes at the farm level by meeting certain environmental requirements in return for support payments. The mandatory requirements, commonly known as 'greening rules', consist of crop diversification, maintenance of permanent grassland and establishment of an ecological focus area. This paper presents a decision-support tool based on a multi-stage linear programming model that identifies optimal cropping plan decisions under the new Common Agricultural Policy. The capabilities of our tool are illustrated through its application to the Spanish agricultural regions. Our method identifies the optimal cropping plan (i.e., crops to be grown and their acreage each year during the reform horizon) that maximizes the farmer's net return in each region. Furthermore, the model can also be used to calculate the minimum subsidy value that would make the implementation of greening rules economically appealing, thereby promoting the widespread adoption of more sustainable agricultural practises. (C) 2015 Elsevier Ltd. All rights reserved. |
The dynamic effects of government-supported farm-investment activities on structural change in Austrian agriculture (2015) 🗎🗎 | The objective of our paper is to analyse the effects of government-supported farm-investment activities on structural change in agriculture. Our method comprises combining direct covariate matching with a difference-in-difference (DiD) estimator. In order to capture the dynamics and the heterogeneity of structural effects, we have developed time and farm-group specific models. We apply our model in Austria, where we analyse the Integrated Administration and Control System (IACS) data of 98,000 farms within the time period of 2000-2011. Our results show that farms adapt their numbers of livestock very quickly, whereas, the increase in agricultural area seems to be fairly decoupled from the investment activity itself. Effects tend to be farm-group specific; e.g. farm size initially increases (and drops) on pig farms to a greater extent than on cattle farms. Furthermore, government-supported farm-investment activities not only influence structural change but also tend to increase production intensity and reduce diversification on arable land perhaps counteracting, therefore, the goals of agri-environmental schemes. However, our results indicate that investing (cattle) farmers are more likely to enter the organic farming programme and tend rather to remain in animal husbandry. (C) 2015 Elsevier Ltd. All rights reserved. |
Impacts of agri-environmental policy on land use and nitrogen leaching in Finland (2015) 🗎🗎 | Agri-environmental policies are challenging to be evaluated since they are often implemented in combination with other policies and regulations affecting agriculture. Also input and output markets affect agriculture. We provide impact assessment of agri-environmental scheme implemented in Finland 2007-2013 based on integrated economic and hydrological modelling and counterfactual scenarios. Development of crop specific fertilisation and land use changes, simulated using a multi-regional economic sector model, is included in a nutrient leaching model implemented in a typical agricultural region. Our results on agricultural production, land use, and nitrogen leaching show that the agri-environmental policy successfully mitigates nutrient leaching in intensive production regions but some mitigation potential is lost in less intensive regions. (C) 2015 Elsevier Ltd. All rights reserved. |
Trade Liberalization versus Climate Change Policy for Reducing Greenhouse Gas Emissions in Agriculture: Some Insights from Norway (2015) 🗎🗎 | Using a mathematical programming model of Norwegian agriculture, we explore interconnections between trade liberalization and reductions in greenhouse gas (GHG) emissions. We show that the Doha Round proposals for a new agreement on agriculture through the World Trade Organization would not generate significant reductions in emissions. Further trade liberalization would reduce emissions by cutting agricultural production but would not change production methods. Imposing a carbon tax would lead both to a reduction in output and the extensification of production. In contrast, if farmers are allowed to claim a credit for carbon sequestration the effect is to intensify agricultural production. |
Simulation of the impact of greening measures in an agricultural area of the southern Italy (2015) 🗎🗎 | Together, sustainable management of natural resources and climate action form one of the three objectives of the 2014-2020 Common Agricultural Policy. This objective is being addressed by replacing the existing direct payments under Pillar 1 with a basic payment, combined with an additional payment conditional on farmers undertaking agricultural practices beneficial for the climate and the environment, a policy referred to as greening. In this study, the impact of greening was assessed using a hybrid model calibrated using positive mathematical programming. The model describes the macro-types of farm production in a Mediterranean agricultural area. The results show that greening was not beneficial throughout the study area and only some farm types have been particularly affected. However, greening appears to have a positive impact on curtailing the use of chemicals, particularly nitrogen, and on crop diversity. (C) 2015 Elsevier Ltd. All rights reserved. |
The cost of climate change: Ecosystem services and wildland fires (2015) 🗎🗎 | Little research has focused on the economic impact associated with climate-change induced wildland fire on natural ecosystems and the goods and services they provide. We examine changes in wildland fire patterns based on the U.S. Forest Service's MC1 dynamic global vegetation model from 2013 to 2115 under two pre-defined scenarios: a reference (i.e., business-as-usual) and a greenhouse gas mitigation policy scenario. We construct a habitat equivalency model under which fuels management activities, actions commonly undertaken to reduce the frequency and/or severity of wildland fire, are used to compensate for climate change-induced losses in ecosystem services on conservation lands in the contiguous U.S. resulting from wildland fire. The benefit of the greenhouse gas mitigation policy is equal to the difference in fuels management costs between the reference and policy scenarios. Results suggest present value ecosystem service benefits of greenhouse gas mitigation on the average of $3.5 billion (2005 dollars, assuming a three percent discount rate). Our analysis highlights the importance of considering loss of ecosystem services when evaluating the impacts of alternative greenhouse gas mitigation policies. (C) 2015 Published by Elsevier B.V. |
Maize systems under climate change in sub-Saharan Africa Potential impacts on production and food security (2015) 🗎🗎 | Purpose - The purpose of this study is to examine the biophysical and socioeconomic impacts of climate change on maize production and food security in sub-Saharan Africa (SSA) using adapted improved maize varieties and well-calibrated and validated bioeconomic models. Design/methodology/approach - Using the past climate (1950-2000) as a baseline, the study estimated the biophysical impacts of climate change in 2050 (2040-2069) and 2080 (2070-2099) under the A1B emission scenario and three nitrogen levels, and the socioeconomic impacts in 2050. Findings - Climate change will affect maize yields across SSA in 2050 and 2080, and the extent of the impact at a given period will vary considerably between input levels, regions and maize mega environments (MMEs). Greater relative yield reductions may occur under medium and high-input intensification than under low intensification, in Western and Southern Africa than in Eastern and Central Africa and in lowland and dry mid-altitude than in highland and wet mid-altitude MMEs. Climate change may worsen food insecurity in SSA in 2050 through its negative impact on maize consumption and reduction in daily calorie intake. However, international trade has the potential to offset some of the negative impacts. Originality/value - The study calibrated and applied bioeconomic models to estimate the biophysical and socioeconomic impact of climate change on maize production at fine resolution. The results could be used as a baseline to evaluate measures that will be applied to adapt maize to the future climate in SSA. |
How Inefficient Are Nutrient Application Limits? A Dynamic Analysis of Groundwater Nitrate Pollution from Concentrated Animal Feeding Operations (2015) 🗎🗎 | Animal waste from concentrated animal feeding operations (CAFOs) is a significant contributor to nitrate contamination of groundwater. To evaluate the cost-effectiveness of alternative policies for controlling nitrate pollution at both the field and farm level, this article utilizes a structural dynamic model of a representative CAFO. The model accounts for herd management, manure handling systems, crop rotations, water sources, irrigation systems, waste disposal options, and pollutant emissions. Results show that the standard approach of limiting the amount of animal waste that may be applied to fields reduces net farm income by more than 25%, whereas the most cost-effective emission-based policies reduce income only marginally. This motivates greater consideration for nonpoint source pollution control policies that target estimated emissions. Furthermore, price instruments are shown to slightly outperform quantity instruments under conditions that are typical for CAFOs. The results also show that adopting alternative technologies and practices is crucial for cost-effective abatement, and demonstrate the importance of accounting for the spatial heterogeneity of both irrigation water and salinity when designing policy mechanisms for nitrate pollution control. |
Transaction Costs in Payment for Environmental Service Contracts (2015) 🗎🗎 | Payment for environmental service contracts commonly require actions beyond adoption of a practice, such as undergoing specified enrollment procedures, granting consent to being monitored, and paying penalties for violations. These provisions are a bundle of attributes a landholder must accept with contract enrollment, leading to transaction costs in the contracting process. This article develops a principal-agent framework to study the links between these transaction costs and the well-known information asymmetries between the landholders and the government agency offering contracts. Using stated choice data collected from a sample of farmers, we estimate a mixed logit model to quantify the contribution of different contract attributes on contract willingness-to-accept (WTA). More stringent provisions in contracts were found to raise individual WTA by widely differing amounts across farmers, but the average effects imply that overall contract supply is sensitive to stringency. From a series of microsimulations based on the estimated model, we find that transaction costs create a significant drain on the cost-effectiveness of contracting from the agency's point of view, similar in magnitude to the inefficiency created by hidden information. Although stringent contractual terms raise program expenditures, they may be justified if they raise compliance rates enough to offset the added cost. We also simulate an implicit frontier to trace out the change in compliance needed to justify a given increase in stringency. For environmental benefits in the range of previous estimates, this analysis suggests that stringent terms would need to substantially raise compliance rates to be cost effective. |
Environmental potentials of policy instruments to mitigate nutrient emissions in Chinese livestock production (2015) 🗎🗎 | To minimize negative environmental impact of livestock production, policy-makers face a challenge to design and implement more effective policy instruments for livestock farmers at different scales. This research builds an assessment framework on the basis of an agent-based model, named ANEM, to explore nutrient mitigation potentials of five policy instruments, using pig production in Zhongjiang county, southwest China, as the empirical filling. The effects of different policy scenarios are simulated and compared using four indicators and differentiating between small, medium and large scale pig farms. Technology standards, biogas subsidies and information provisioning prove to be the most effective policies, while pollution fees and manure markets fail to environmentally improve manure management in pig livestock farming. Medium-scale farms are the more relevant scale category for a more environmentally sound development of Chinese livestock production. A number of policy recommendations are formulated as conclusion, as well as some limitations and prospects of the simulations are discussed. (C) 2014 Elsevier B.V. All rights reserved. |
An ex-ante impact assessment of the Common Agricultural Policy reform in the North-Western Romania (2015) 🗎🗎 | The paper aims to assess the impact of the Common Agricultural Policy reform (post 2014) in the environmental vulnerable areas from Romania. It proposes a bio-economic dynamic farm model calibrated with the positive mathematical programming (PMP). The standard PMP approach was extended to simulate the mixed farming systems through the introduction of a livestock production activity in the first calibration step. It allows incorporating activities not available in the base year, but that can be performed by the farmers after the future policy reforms. The model provides supply-responses for both the crop and livestock farms according to the agricultural and financial policy shifts. It maximizes the farm net financial flows subject to the resource, livestock, financial and agricultural policy constraints. The initialisation data were obtained from a face-to-face stratified survey applied on the mixed-sheep farms that have used grassland areas under the Agri-Environment Schemes (AES) in the North-Western Romania (Transylvania). The results show that the most vulnerable group to the policy changes is represented by the small-size farms, to which the AES are very important economic drivers. Thus, the diversification and the off-farm employments possibilities should be integrated into the future rural development plans as a premise for their survival. |
The Impact of Pillar II Funding: Validation from a Modelling and Evaluation Perspective (2015) 🗎🗎 | We extend the Common Agricultural Policy Regionalised Impact Modelling System (CAPRI) with a regional computational general equilibrium (CGE) model to estimate the effects of the Pillar II of the Common Agricultural Policy. Our aim is to assess the modeling approach by comparing the scenario results with observations from the evaluation reports for rural development, supplemented with expert interviews and findings from the literature. For this purpose, an ex-post scenario is developed for Germany that models the effect of the Pillar II measures in 2006. We observe a moderate impact, namely, an increase in agricultural income (5%) and agricultural land use (0.15%), particularly grassland, and a substitution of arable land with grassland. This effect leads to a total increase in agricultural production, particularly of beef, and to an increase in total greenhouse gas emissions and total nitrogen surplus for Germany. Greenhouse gas emissions and nutrient surpluses per ha, however, are reduced. We observe that farm investment programmes displace private investment. The evaluation reports confirm the moderate impact and our major results, as does the comparison with other literature. However, the conclusions about agri-environment measures and their impact on income differ. The most important difference between our results and the evaluation reports and majority of the present literature is that we also quantify the joint effect between the whole economy and policy measures, with some contradictory effects. |
An analysis of the socio-economic factors influencing the adoption of conservation agriculture as a climate change mitigation activity in Australian dryland grain production (2015) 🗎🗎 | The cropping sector in Australia contributes 2.5% of national greenhouse gas emissions, not accounting for the historical loss of soil carbon. The Australian Government is developing policy initiatives targeted at farmers to encourage changes in management practices that aim to reduce emissions from the agricultural sector. The main policy proposal being developed is a market-based mechanism to pay farmers from an Emissions Reduction Fund using methodologies specified under the Australian Carbon Farming Initiative. The adoption of conservation agriculture practices in the dryland grain sector in Australia shows the potential to achieve emissions reductions in the order of three million tCO(2)e annually. This paper presents a series of systems models that describe the process of how Australian dryland grain farmers decide to change and adopt conservation agriculture practices. Results indicate that a number of economic and social factors drive the rate of practice change, and change seems to be motivated mostly by the pursuit of productivity benefits rather than environmental benefits. We postulate that it may be more effective for climate policy to directly target the adoption of conservation agriculture practices amongst Australian dryland grain farmers by promoting the crop productivity benefits likely to be achieved by such practices, rather than attempting to develop a market-based mechanism for carbon payments. Under this approach, emissions reduction outcomes and carbon payments would not be the primary driver for changing farming practices, but rather a concurrent benefit. (C) 2014 Elsevier Ltd. All rights reserved. |
Benefits and costs of biodiversity in agricultural public policies (2015) 🗎🗎 | This paper examines the role played by biodiversity goals in the design of agricultural policies. A bio-economic model is developed with a dynamic and multi-scale perspective. It combines biodiversity dynamics, farming land-uses selected at the micro level and public policies at the macro level based on financial incentives for land-uses. The public decision-maker identifies optimal subsidies or taxes with respect to both biodiversity and budgetary constraints. These optimal policies are then analysed through their private, public and social costs. The model is calibrated and applied to metropolitan France at the small agricultural region scale, using common birds as biodiversity metrics. First results relying on optimality curves and private costs stress the bioeconomic trade-off between biodiversity and economic scores. In contrast, the analysis of public costs suggests that accounting for biodiversity can generate a second benefit in terms of public budget. Social costs defined as the sum of private and public costs also show possible bio-economic synergies. |
How do incentive-based environmental policies affect environment protection initiatives of farmers? An experimental economic analysis using the example of species richness (2015) 🗎🗎 | To address ongoing biodiversity losses, the use of incentive-based nature protection policies is increasingly recommended. In the present paper, we examine how action and result-oriented agricultural policy measures affect the species protection initiatives of real agricultural managers. To do so, we use a computer-based economic experiment involving a multi-period individual business, simulation game. Our results indicate that action-oriented measures do not have any impacts on farmers' initiatives to protect species. In contrast to action-oriented policy measures, result-oriented measures with identical profit effect significantly increase these initiatives. Although risk-averse farmers are less willing to participate in result-oriented measures than non-risk-averse farmers, in general, risk aversion does not influence farmers' species protection initiatives. Furthermore, the species protection initiatives are influenced by the opportunity costs of species protection. (c) 2015 Elsevier B.V. All rights reserved, |
The design of agri-environmental schemes: Farmers' preferences in southern Spain (2015) 🗎🗎 | Agri-environmental schemes (AES) play a key role in promoting the production of environmental public goods by European Union agriculture. Although extensive literature has analyzed AES, some important issues remain understudied. This paper performs an ex-ante assessment of AES in permanent cropping, analyzing several issues that have received little attention from researchers, such as ecological focus areas (EFA) and collective participation. For this purpose, a choice experiment was used to assess farmers' preferences toward AES in a case study of olive groves in southern Spain. Results show high heterogeneity among farmers, with different classes being identified, from potential participants to non-participants. As regards EFA, almost half of the farmers would be willing to accept it up to 2% for low monetary incentives ((sic)8-9/ha per additional 1% of the farmland devoted to EFA) while the rest would do it for moderate-to-high monetary incentives ((sic)41-151 /ha per additional 1% of EFA). However, for a high share of EFA (e.g., 5-7%) higher incentives would presumably be required due to the intrinsic spatial restrictions of olive groves. With regard to collective participation, we find that it is unlikely that farmers would participate collectively with the incentive of the up to 30% EU-wide bonus. These results are relevant for policy-making now when new AES are being designed for the next programming period 2014-2020. (C) 2015 Elsevier Ltd. All rights reserved. |
Farm size and participation in agri-environmental measures: Farm-level evidence from Slovenia (2015) 🗎🗎 | This paper analyses the determinants of farmer participation in agri-environmental measures (AEMs) using the Slovenian Farm Accountancy Data Network (FADN) during the 2004-2010 period. Previous papers have not shown a straightforward relationship between farm size and decisions to participate in AEM. Considering explicitly the farm size, the controversial subject of the role of farm size is investigated by conducting logit regression analyses. We examine the influence of farm-specific characteristics on participation in AEMs using three different farm sizes: small, medium, and large. The findings strongly suggest that there are differences between the determinant factors of AEM participation based on farms' utilised agricultural area, particularly between small and large farms. This conclusion is supported by those variables that describe farm capital per land intensity, off-farm income and type of farming as significant determinants for large farm models but not for small farm models. Furthermore, variables that describe land productivity negatively influence participation in AEMs for large farms, whereas these variables positively influence the participation of small farms. The results highlight the importance of how these previously confirmed factors influencing AEM participation differ according to the three different farm sizes. (C) 2015 Elsevier Ltd. All rights reserved. |
Spatial modeling of robust crop production portfolios to assess agricultural vulnerability and adaptation to climate change (2015) 🗎🗎 | Agricultural vulnerability to climate change is likely to vary considerably between agro-environmental regions. Exemplified on Austrian cropland, we aim at (i) quantifying climate change impacts on agricultural vulnerability which is approximated by the indicators crop yields and gross margins, (ii) developing robust crop production portfolios for adaptation, and (iii) analyzing the effect of agricultural policies and risk aversion on the choice of crop production portfolios. We have employed a spatially explicit, integrated framework to assess agricultural vulnerability and adaptation. It combines a statistical climate change model for Austria and the period 2010-2040, a crop rotation model, the bio-physical process model EPIC (Environmental Policy Integrated Climate), and a portfolio optimization model. We find that under climate change, crop production portfolios include higher shares of intensive crop management practices, increasing average crop yields by 2-15% and expected gross margins by 3-18%, respectively. The results depend on the choice of adaptation measures and on the level of risk aversion and vary by region. In the semi-arid eastern parts of Austria, average dry matter crop yields are lower but gross margins are higher than in western Austria due to bio-physical and agronomic heterogeneities. An abolishment of decoupled farm payments and a threefold increase in agri-environmental premiums would reduce nitrogen inputs by 23-33%, but also crop yields and gross margins by 18-37%, on average. From a policy perspective, a twofold increase in agri-environmental premiums could effectively reduce the trade-offs between crop production and environmental impacts. (C) 2015 Elsevier Ltd. All rights reserved. |
Increasing the cost-effectiveness of EU agri-environment policy measures through evaluation of farm and field-level environmental and economic performance (2015) 🗎🗎 | A lot of attention in the debate on the 2014-2020 programming period of the EU CAP and rural development policy revolves around the policy's contribution to enhancing resource use efficiency, decreasing environmental impact, restoring ecosystems and how to ensure more efficient and effective agrienvironmental measures (AEMs). Nevertheless, studies that simultaneously address multiple measures with multiple environmental objectives and targets are underrepresented in the scientific literature. The objectives of the present article are (i) to present an integrated tool-kit for AEM design resulting from the combination of farm modelling with the Sustainable Value Approach (SVA), and (ii) to evaluate the potential of the tool-kit to support AEM design through an application to estimate cost-effective organic agriculture payments for the dairy sector in Mugello, northern Tuscany. Sustainability assessment of organic and conventional farming systems (OFS and CFS, respectively.) under the 2007-2013 EU CAP support schemes and a no EU support scenario show better OFS performances regarding nitrogen leaching (-52% and -47% under the current CAP and the no EU support scenarios, respectively), soil erosion (-24% and -34%), potential pesticide risks (-100%), biodiversity (+13% and +30%). Income foregone for the production of environmental benefits from organic agriculture under a no EU support scenario is equal to 210 Euro/ha. Sustainable value calculations combined with modelling results indicate soil erosion and nitrogen leaching as the environmental processes to be addressed with specific policy measures to further increase the efficiency of organic farming. A new organic agriculture support scheme designed based on such indications further increases the OFS SV and almost closes the GAP with a benchmark farm of the area, featured with ideal performances in terms of environmental and economic indicators. The payment scheme we designed with the support of the integrated tool-kit shows to be more cost-effective and efficient of current AEMs. (C) 2015 Elsevier Ltd. All rights reserved. |
Targeting the impact of agri-environmental policy - Future scenarios in two less favoured areas in Portugal (2016) 🗎🗎 | Targeting agri-environmental measures (AEM) improves their effectiveness in the delivery of public goods, provided the necessary coordination with other incentives. In less favoured areas (LFA) measures focusing on the conservation of extensive farming contribute to sustainable land management in these areas. In this paper we investigate the implementation of a possible AEM supporting the improvement of permanent pastures coordinated with the extensive livestock and single farm payments actually in place. Through applying a spatially-explicit mixed integer optimisation model we simulate future land use scenarios for two less favoured areas in Portugal (Centro and Alentejo) considering two policy scenarios: a 'targeted AEM', and a 'non-targeted AEM'. We then compare the results with a 'basic policy' option (reflecting a situation without AEM). This is done with regard to landscape-scale effects on the reduction of fire hazard and erosion risk, as well as effects on farm income. The results show that an AEM for permanent pastures would be more cost-effective for erosion and fire hazard mitigation if implemented within a spatially targeted framework. However when cost-effectiveness is assessed with other indicators (e.g. net farm income and share of grazing livestock) 'non-targeted AEM' implementation delivers the best outcome in Alentejo. In Centro the implementation of an AEM involves important losses of income compared to the 'basic policy'. 'Targeted AEM' tends to favour farms in very marginal conditions, i.e. targeting is demonstrated to perform best in landscapes where spatial heterogeneity is higher. The results also show the risk of farm abandonment in the two studied less favoured areas: in all three scenarios more than 30% of arable land is deemed to be abandoned. (C) 2016 Elsevier Ltd. All rights reserved. |
Non-tariff measures, preferential trade agreements, and prices: new evidence (2016) 🗎🗎 | Combining for the first time a new dataset of non-tariff measures (NTMs) in 65 countries with the CEPII's unit values database, we estimate average ad-valorem equivalents (AVEs) for sanitary and phytosanitary, technical-barriers-to trade and other measures by section of the Harmonized System of product classification. While most existing AVEs are obtained from indirect quantity-based estimation, ours are obtained from direct price-gap estimation. They lie in a single-digit range, i.e. substantially lower than previous estimates based on older data. Our results may reflect the progressive phasing out of command-and-control instruments such as quantitative restrictions in many countries; they also suggest that sanitary and technical regulations have not substituted for them as trade-restrictive interventions. Most interestingly, we show that deep-integration clauses in regional trade agreements, in particular the mutual recognition of conformity-assessment procedures, substantially reduce the price-raising effect of NTMs, possibly reflecting lower compliance costs. |
Environmental Performance and Shadow Value of Polluting on Swiss Dairy Farms (2016) 🗎🗎 | Better understanding the trade-offs/synergies between desirable and environmentally harmful (undesirable) farm outputs is relevant for future targeting and tailoring of agri-environmental policy measures. We use a hyperbolic distance function to represent the production technology employed by Swiss dairy farms in mountainous regions, thus allowing for simultaneous expansion of desirable outputs (milk and non-milk) and contraction of undesirable output (nitrogen surplus). We calculate the farm-specific shadow price of the undesirable output. The obtained shadow prices (mean value with respect to milk output was equal to 28 Swiss francs per kg of nitrogen) provide quantitative information on farmers' costs of reducing nitrogen pollution. |
Nudging farmers to enrol land into agri-environmental schemes: the role of a collective bonus (2016) 🗎🗎 | This article shows that the introduction of a conditional collective bonus in an agri-environmental scheme (AES) can improve farmers' participation and increase land enrolment for lower overall budgetary costs. This monetary bonus is paid in addition to the usual AES payment if a given threshold is reached in terms of aggregate farmer participation. Using a choice experiment, we estimate the preferences of winegrowers in the South of France for such a bonus. We show that it contributes to increased expectations of farmers on others' participation, therefore shifting a pro-environmental social norm and favouring the adoption of less pesticide-intensive farming practices. |
Transactions costs of expanding nutrient trading to agricultural working lands: A Virginia case study (2016) 🗎🗎 | Agricultural nonpoint sources (NPS) figure prominently in the design of many water quality trading programs. In concept water quality trading programs can create incentives for agricultural operators to supply low cost pollutant reductions while still keeping land in agricultural production. In practice water quality trading programs in the United States have produced few trades involving agricultural NPS. Transactions costs are a critical, but poorly understood, feature of water quality trading programs. The objective of this study is to examine the transactions costs associated with expanding the use of NPS credits in a water quality trading program in Virginia (United States) to include credits generated from agricultural working lands best management practices (BMPs). Findings indicate that transactions costs for agricultural NPS trades in Virginia are currently relatively low, due to the activity being credited: simple land conversion. Based on best available evidence, transactions costs of creating credits using management and structural BMPs will be 2 to 16 times more costly on a per project basis than for land conversion credits. Compliance monitoring protocols are a significant driver of costs for working lands credits. Our results suggest an important cost/risk tradeoff between verification costs and compliance certainty for program designers to consider. (C) 2016 Elsevier B.V. All rights reserved. |
Interactions between CAP Agricultural and Agri-Environmental Subsidies and Their Effects on the Uptake of Organic Farming (2016) 🗎🗎 | We analyze the effects of the interactions that the two pillars of the European Union Common Agricultural Policy-market support and rural development-have on farmers' uptake of organic farming practices. Special attention is given to the 2003 reform, which substantially altered the relative importance of the two types of support by decoupling direct agricultural payments from the production of a specific crop. In our empirical analysis we study the case of Sweden, making use of the variation in the timing of farmers' decisions regarding participation in support programs. We estimate a dynamic non-linear unobserved effects probit model to account for unobserved individual heterogeneity and state dependence. Our results indicate the existence of a negative effect of the market support system in place when organic farming techniques were adopted before the 2003 reform. However, this effect is reversed by the introduction of decoupling. Furthermore, the effects of support differ between certified and non-certified organic production: both pillars have significant effects on non-certified organic farming, whereas certified organic farming is exclusively driven by agro-environmental subsidies. |
Integrating cobenefits produced with water quality BMPs into credits markets: Conceptualization and experimental illustration for EPRI's Ohio River Basin Trading (2016) 🗎🗎 | This paper develops a method that incorporates the public value for environmental cobenefits when a conservation buyer can purchase water quality credits based on nonmarket valuation results. We demonstrate this approach through an experiment with adult students in a classroom laboratory environment. Our application contributes to the study of individual preference and willingness to pay for cobenefits associated with the production of water quality credits in relation to the Ohio River Basin Trading Project. We use three different methods to elicit individuals' willingness to pay (WTP), including (1) a hypothetical referendum, (2) a real referendum lacking incentive compatibility, and (3) a real choice with incentive compatibility. Methodologically, our WTP estimates suggest individuals are more sensitive to the cost changes and reveal the lowest value in the real choice with incentive compatibility. Practically, we find individuals value certain cobenefits and credits as public goods. Incorporating public value toward cobenefits may improve the overall efficiency of a water quality trading market. Based on our specification of a planner's welfare function, results suggest a substantial welfare improvement after identifying an optimal allocation of a buyer's budget across credits derived from agricultural management practices producing different portfolios of cobenefits. |
Reforming fossil fuel prices in India: Dilemma of a developing economy (2016) 🗎🗎 | Over the period between 1990-1 and 2012-3, fossil fuel use on farms has risen and its indirect use in farming, particularly for non-energy purposes, is also growing. Consequently, both energy intensity and fossil fuel intensity are rising for Indian agriculture. But, these are declining for the aggregate Indian economy. Thus, revision of fossil fuel prices acquires greater significance for Indian agriculture than for rest of the economy. There are significant differences across crops. The crop-level analysis is supplemented by an alternative approach that utilizes a three-sector input-output (I-O) model for the Indian economy representing farming, fossil fuels, and rest of economy. Fossil fuels sector is assessed to portray, in general, strong forward linkages. The increase in total cost of farming, for a given change in fossil fuel prices, is estimated as a multiple of increase in direct input cost of fossil fuels in farming. From the three sector aggregated economy this multiple was estimated at 3.99 for 1998-9. But it grew to 6.7 in 2007-8. The findings have stronger ramifications than commonly recognized, for inflation and cost of implementing the policy on food security. (C) 2016 Elsevier Ltd. All rights reserved. |
Marginal Damage Cost of Nutrient Enrichment: The Case of the Baltic Sea (2016) 🗎🗎 | The purpose of this article is to investigate the link between marine pollution and marine renewable resources. An extended bio-economic model of a fishery is developed to include nutrient enrichment and built into a general model of the polluting and fishery sector with nutrient concentration and fish stock as state variables. The marginal damage function for nutrient enrichment is derived. This function can be compared with the marginal abatement cost and hence it provides a basis for policies that balance the use of nutrients in land-based industries (for example agriculture) with the external cost to the marine environment. The model is empirically applied to the case of the Baltic Sea, where Eastern Baltic cod fisheries are affected by nutrient enrichment. The results indicate that nitrogen loading needs to be reduced slightly (around 1 %) to reach optimal levels. The results also show that the optimal fishery policy plays a more important role in producing the net benefits than nitrogen reduction policies do. Further, the impact on the productivity of the fish stock from pollution reduction is higher when an optimal policy is followed. |
Actual provision as an alternative criterion to improve the efficiency of payments for ecosystem services for C sequestration in semiarid vineyards (2016) 🗎🗎 | The aim of this paper is to evaluate the efficiency of the PES scheme actually used in the Sicilian rural development program, based on an egalitarian criterion, and proposing an alternative scheme in order to guarantee a greater equity and fairness of premium distribution in relation to soil carbon (C) sequestration potential. We, first, assessed the ecosystem services (ES) provided by agri-environmental measures (AEM) in terms of SOC stock increase in Sicilian vineyards. Based on these data we evaluated the efficiency of agro-environmental payments according to an egalitarian criterion and simulated the effects of the actual provision criterion adoption. Results showed that the adoption of an egalitarian criterion generates an inequitable distribution of agri-environmental payments, which could potentially be mitigated by a scheme such as actual provision. The latter, indeed, leads to a greater efficiency in the distribution of financial resources among land users and offers a higher premium to land users that, by adopting an agro-environmental practice, contribute to increase soil C sequestration. (C) 2016 Elsevier Ltd. All rights reserved. |
Organic Label, Bargaining Power, and Profit-sharing in the French Fluid Milk Market (2016) 🗎🗎 | The paper determines how the value-added created by an organic label is shared in a vertical chain among manufacturers and retailers. Using purchase data on the French fluid milk sector, we develop a structural econometric model of demand and supply that takes into account the bargaining power between manufacturers and retailers. Our results suggest that the organic label segment is more profitable, as it permits the existence of higher margins. Moreover, an organic label allows manufacturers to achieve more bargaining power relative to retailers, and hence to obtain a higher share of total margins. The econometric model is then used to assess the impact of an environmental policy in favor of the organic segment based on a mechanism of price support. Our results suggest that while a subsidy policy towards organic products benefits both manufacturers and retailers, a tax policy toward conventional products benefits manufacturers of national brands at the expense of retailers and manufacturers that provide the private labels. The benefits of such policies on the environment is relatively small. All such policies tend to increase the impact on global warming and land use, but reduce the impact on eutrophication, acidification, and energy use. |
The Impact of Agri-environmental Schemes on Farm Performance in Five EU Member States: A DID-Matching Approach (2016) 🗎🗎 | The agri-environmental schemes (AESs) of the European Union employ the highest share of the public budget allocated to rural development programs. Our study applies a difference-indifferences propensity score matching estimator to perform a comparative analysis of the effects of these schemes on farmers' performance across five E.U. member states. The effects of the AESs adoption largely depend on the share of the agri-environmental payment on farm revenue. If this share is larger than 5%, participation in AESs is effective in promoting greener farming practices in all countries but Spain, where a negative effect on farm income is also shown. |
Farmers' preferences for livestock pollution control policy in China: a choice experiment method (2016) 🗎🗎 | Using a survey data of 754 pig breeders in China, the choice experiment method was employed to investigate farmers' preferences for livestock pollution control policy. Five attributes-technical support, pollution fees, technical standards, biogas subsidies, and the manure market-were set as parameters of a study of livestock pollution control policies. A random parameter logit model was used, which considered the heterogeneity of the farmers' preferences. The main results are as follows: (i) the biogas subsidy, technical support, pollution fees and manure market were shown to be significant factors of preference-over alternative policy designs-in terms of incremental changes in environmentally friendly manure handling; (ii) heterogeneity was observed in farmers' preferences for livestock pollution control policies. Farmers' choices of improved pollution policy options were significantly influenced by their education, the size of their farms and their willingness to treat pollution; (iii) farmers showed the highest preferences for a biogas subsidy policy, followed (in this order) by a high technical support policy, a pollution fee policy, a medium technical support policy, a manure market policy and finally a technical standard policy. (C) 2016 Elsevier Ltd. All rights reserved. |
Persistence in industrial policy impacts: Evidence from Depression-era Mississippi (2017) 🗎🗎 | This paper studies the effects of a large-scale industrial policy implemented in 1930s Mississippi on contemporaneous and modern-day labor market outcomes. Attracted by unprecedented government incentives under Mississippi's Balance Agriculture with Industry (BAWI) Program, 13 large manufacturing plants established operations in the state between 1936 and 1940. Using difference-in-differences and synthetic control matching techniques, I find that counties that received these plants experienced an over 15% increase in female labor force participation on average in the short run. Moreover, these effects persisted decades into the future, well after many of the original companies shut down. I also find suggestive evidence of an increase in educational attainment among women in counties where BAWI investment occurred. The results highlight the potential for even transitory government interventions to have long-lived effects on labor markets. (C) 2017 Elsevier Inc. All rights reserved. |
Canadian Agricultural Business Risk Management Programs: Implications for Farm Wealth and Environmental Stewardship (2017) 🗎🗎 | This paper examines the effects of Canadian agricultural business risk management (BRM) programs on farm financial performance and incentives to adopt environmental stewardship practices (i.e., Beneficial Management Practices [BMPs]). Monte Carlo simulation is used to model stochastic prices and production for a representative Alberta cropping operation. Net present value analysis is used to evaluate BRM program participation. Participation is modeled for Growing Forward and Growing Forward 2 versions of AgriInvest, AgriStability, and AgriInsurance. Adoption of select BMPs is also modeled. Results indicate that BRM program participation significantly improves farm financial performance with a corresponding reduction in risk. Much of the benefit from participation comes from subsidization associated with the programs. While changes to BRM programs under Growing Forward 2 result in reduced support, the impact on representative farm performance is small. BRM program participation reinforces incentives to adopt BMPs that already have positive net benefits (e.g., crop rotation BMPs) and increases the magnitude of disincentives (i.e., net costs) associated with adoption of land use BMPs such as wetland restoration or buffer strips. The results from this analysis raise questions related to both risk management and agri-environmental policy in terms of policy effectiveness, efficiency, and compatibility. |
Is Passive Farming A Problem for Agriculture in the EU? (2017) 🗎🗎 | We address a new agricultural policy concern following the decoupling of CAP direct payments in 2005: passive farming, whereby landowners maintain their agricultural area to collect payments without producing commodities. It is claimed that passive farming is hindering agricultural development by 'blocking' access to farmland for expanding farmers. We evaluate the links between the EU's Single Payment Scheme (SPS), passive farming, land use and agricultural development. Following identification of the rational landowners' optimal land-use choice, we evaluate the effects of the SPS using a spatial, agent-based model that simulates farmers' competition for land in a case-study region of Sweden. We show that passive farming does not constrain land from being used in production; on the contrary more land is used than would be the case without the SPS. We conclude that passive farming is not a problem for agriculture, but provides public goods that would otherwise be under provided: preservation of marginal farmland and future food security. However SPS payments on highly productive land inflate land values (capitalisation) and slow structural change, which hinder agricultural development. Consequently CAP goals could be better served by targeting payments on marginal land and phasing out payments to highly productive land. |
Food Grain Policies in India and their Implications for Stocks and Fiscal Costs: A Dynamic Partial Equilibrium Analysis (2017) 🗎🗎 | We analyse current and possible future reforms of the Indian food policies for the most important staple grains, wheat and rice, within a two-commodity dynamic partial equilibrium model with stochastic shocks. The model is empirically grounded and reproduces past values well. It uses a new reduced-form approach to capture private storage dynamics. We evaluate the implementation of the National Food Security Act (NFSA) under several policy measures with the current regime as well as two scenarios with a regime change - implementation of cash transfers and deficiency payments. Implications for market fundamentals and fiscal costs are simulated in the medium term - until 2020/21. The NFSA puts a high pressure on fiscal costs and public stocks. Relying on imports with low support prices results in low fiscal costs and stable, but higher domestic and international prices, and a high risk of zero stocks. A policy strategy to manipulate procurement prices in order to maintain public stocks close to the norms leads to slightly higher fiscal costs with lower, but more volatile prices. The highest domestic price volatility occurs under a strategy which uses export bans in order to maintain sufficient public stocks. A cash-based regime can bring considerable savings and curb fiscal costs, particularly if targeted to the poor, and would leave sufficient stocks due to higher private stocks. |
Spatial targeting of agri-environmental policy using bilevel evolutionary optimization (2017) 🗎🗎 | In this study we describe the optimal designation of agri-environmental policy as a bilevel optimization problem and propose an integrated solution method using a hybrid genetic algorithm. The problem is characterized by a single leader, the agency, that establishes a policy with the goal of optimizing its own objectives, and multiple followers, the producers, who respond by complying with the policy in a way that maximizes their own objectives. We assume that the leader has perfect knowledge of policy outcomes for all parameterizations of agri-environmental policy. We use a hybrid genetic algorithm to simulate perfect knowledge of all policy outcomes in a bilevel optimization. Our hybrid genetic algorithm integrates a biophysical model (Soil and Water Assessment Tool; SWAT) with an economic model (profit maximization; DEA). The Soil and Water Assessment Tool (SWAT) is included to specify agency environmental objectives, and Data Envelopment Analysis (DEA) is used to model producer behavior in response to agri-environmental policy. We applied the resulting integrated modeling system to the analysis of an input tax on fertilizer in the Calapooia watershed in Oregon, USA. Application of the incentive policy at different geographical resolutions showed that bilevel optimization is effective for calculating optimal spatial targeting of agri-environmental policy. Surprisingly, the presented algorithm found multiple different policy configurations that achieved nearly identical results for the upper level (agency) objectives. This observation raises the possibility that additional objectives could incorporate equity, equality of outcome, and policy initiatives such as support for small farms at no additional cost. Published by Elsevier Ltd. |
Farmer preferences for conservation incentives that promote voluntary phosphorus abatement in agricultural watersheds (2017) 🗎🗎 | Financial incentives are commonly used to promote voluntary adoption of agricultural best management practices (BMPs), but little is known about farmer preferences among alternative incentives. Using experimental procurement auctions, we evaluate how different conservation incentives affect farmer willingness to adopt BMPs that reduce phosphorus (P) runoff, a major driver of harmful algal blooms in Lake Erie. We rank incentives (e.g., payment, BMP insurance, tax credit, and certification price premium) by the cost per pound of P runoff reduction. Payments and tax credits that target high impact areas of the watershed are more cost-effective than untargeted price premiums for product certification. Farmers demand higher payments for contracts offering BMP insurance (i.e., protection against yield loss from BMP use) due to uncertainty about how the program will be implemented and the reliability of indemnities, as well as anticipated transaction costs associated with the program. Understanding farmer preferences for different types of conservation incentives is critical to design agri-environmental programs that engage more farmers and cost-effectively enhance ecosystem services. |
ADDRESSING PARTICIPANT INATTENTION IN FEDERAL PROGRAMS: A FIELD EXPERIMENT WITH THE CONSERVATION RESERVE PROGRAM (2017) 🗎🗎 | Voluntary land conservation programs depend upon the willingness of land owners to participate. Since participation requires commitment to long-term contracts, most studies on participation focus on changes to the pecuniary incentives facing land owners. This study presents a large-scale field experiment within the USDA's Conservation Reserve Program (CRP) that examines whether informational outreach, including behavioral nudges, could improve land owners' willingness to participate. The experiment evaluates the impact of three types of reminder letters on the rate at which land is offered into the CRP. We find that for the most well-informed group, farms with expiring CRP contracts, the reminder letters did improve participation. We interpret this result as evidence of inattentive behavior. We do not detect any differences in the estimated treatment effects among the basic reminder letter and the letters augmented with peer comparisons and social norm messaging, nor do we detect any treatment effect among currently unenrolled farms. From a policy perspective, these results imply that the USDA can generate additional CRP offers among farms with expiring contracts at an average cost of $ 39 per additional offer. Assuming a twenty-five million acre program, reminder letters sent during every sign-up period would result in re-enrollment offers from an additional 420,000 acres. Using simulations based on offers from prior CRP sign-ups, we estimate that these additional offers in the CRP auction would reduce program costs. Depending on the year of simulation, the outreach effort achieves a benefit-cost ratio of between 20: 1 and 90: 1. |
Interaction effects of targeted agri-environmental payments on non-marketed goods and services under climate change in a mountain region (2017) 🗎🗎 | Targeting of agri-environmental measures (AEMs) is a key to increasing the cost-effectiveness of governmental support for biodiversity conservation and the provision of ecosystem services from agriculture. Existing literature, however, often focuses on single measures without considering that policies are usually bundles of different measures addressing multiple non-marketed goods and services. Thus, interaction effects of a set of policies in a given policy mix may influence the cost-effectiveness of single measures. Recently, Swiss agricultural policy was redesigned using the Tinbergen rule as its basis, i.e., a single measure for each policy goal, including additional targeted direct payments. This facilitates testing for interaction effects of multiple targeted AEMs. Here we use a social-ecological, agent-based modelling framework to assess interaction effects of these agricultural policies while accounting for climate change impacts in our analysis. The results from our case study in a mountain region show that ecosystem service provision increases with targeted payments. However, interaction effects of the different targeted policies affect the provision levels of all goods and services. In particular, changes at the extensive margin, i.e., the total amount of land that is under production, largely determine the amount of ecosystem services provided. Thus, climate change driven productivity increases and policies that keep land in production may substantially support the provision of non-marketed goods and services in marginal agricultural production regions with a high potential for land abandonment. Consequently, the effectiveness of targeted policy measures should also consider changes at the extensive margin and be assessed in the context of bundles or portfolios of different policy measures. |
A non-parametric bootstrap-data envelopment analysis approach for environmental policy planning and management of agricultural efficiency in EU countries (2017) 🗎🗎 | Globally, agriculture is a dominant form of human use of land with agro-ecosystems covering about 40% of the terrestrial surface of the Earth. In this context, the European Union considers agriculture a key sector of the economy, recognizing, however, the related environmental implications. The aim of this paper is to examine the agricultural efficiency of EU countries, through a bootstrap-Data Envelopment Analysis (DEA) approach, an effective nonparametric method for evaluating the relative efficiency of the decision-making units. European datasets, suitable for policies and focused on the integration between agricultural productivity and ecosystem services (ESs) conservation, have been used to support planners and managers. Data related to five inputs (labor, land, capital, fertilizers, and irrigation area) and to one output connected to the economic value of agricultural production were collected from 1993 to 2013. The results show that the majority of EU countries have been experiencing increasing or decreasing returns to scale, highlighting their potential to increase their production efficiency by modifying their input use. Both for the output-oriented approach and the input-oriented approach, the majority of EU countries could better rationalize their input use obtaining more outputs and achieving production efficiency. DEA, a non-parametric methodology has been applied, using the concept of a reference group of efficient decision-making units that produce a similar output (peer group). Input-oriented and output oriented DEA results and comparison indicate that most of the oldest EU countries have a more efficient and optimized crop production process in terms of resource savings and output maximization. This is probably due to the application of the Common Agricultural Policy. Therefore, in policy planning but also in management decisions, attention should always be paid not only to the maximization of agricultural production, but also to the environmental resource overexploitation. In this sense, best agricultural practices could represent a model to follow because they can maintain ESs without depressing production by using practices like conservation tillage, crop diversification, legume intensification and biological control perform giving the same results as intensive, high-input systems. |
EU-wide Economic and Environmental Impacts of CAP Greening with High Spatial and Farm-type Detail (2017) 🗎🗎 | In this paper we analyse the economic and environmental impacts of CAP greening introduced by the 2013 CAP reform using the CAPRI model. CAPRI captures the farm heterogeneity across the EU and it allows to depict the implementation of the greening measures in high detail while integrating the environmental effects and the market feedback of the simulated policy changes. The simulated results reveal that the economic impacts (land use, production, price and income) of CAP greening are rather small, although some farm types, crops (fallow land and pulses) and Member States may be affected more significantly. The CAP greening will lead simultaneously to a small increase in prices and a small decrease in production. Farm income slightly increases because the price effects offset the production decline. Similarly to economic effects, the environmental impacts (GHG emissions, N surplus, ammonia emissions, soil erosion, and biodiversity-friendly farming practices) of CAP greening are small, although some regions may see greater effects than others. In general, the environmental effects at EU level are positive on a per hectare basis, but the increase in UAA can reverse the sign for total impacts. Overall, simulated GHG and ammonia emissions decrease in the EU, while the total N surplus, soil erosion and biodiversity-friendly farming practices indicator slightly increase due to the CAP greening. |
Direct and Indirect Economic Incentives to Mitigate Nitrogen Surpluses: A Sensitivity Analysis (2017) 🗎🗎 | The reduction of nitrogen (N) surplus is an ongoing topic in the agri-environmental policies of many countries in the developed world. The introduction of N balance estimation in agricultural sector models is therefore pertinent and requires an interdisciplinary approach. We extended the agent-based agricultural sector model SWISSland with an N farm gate balance estimation to pre-evaluate the introduction of a levy on N inputs, particularly a levy on fertilizer and imported concentrates, on N surplus reduction in the Swiss agriculture. The model was based on the Swiss farm accountancy data network (FADN) for 3, 000 farms. The model's ability to represent the N balance was assessed by conducting a structured full factorial sensitivity analysis. The sensitivity analysis revealed the possibility to switch to organic farming and the hectare based payments for ensuring food security as key parameters with the largest influence on the modelled N surplus. The evaluation of N input levy scenarios suggested that an introduction of a tax of 800 % of N price will reduce the N surplus by 10 % indicating a price elasticity of -0.03. The sensitivity analysis and the results from the levy scenarios suggest that indirect instruments, such as optimizing the direct payments scheme, should be considered rather than direct instruments for an effective N surpluses mitigation in Swiss agriculture. |
Incorporating risk in a positive mathematical programming framework: a dual approach (2017) 🗎🗎 | In this study we develop a new methodological proposal to incorporate risk into a farm-level positive mathematical programming (PMP) model. We estimate simultaneously the farm nonlinear cost function and a farmer-specific coefficient of absolute risk aversion as well as the resource shadow prices. The model is applied to a sample of representative arable crop farms from the Emilia-Romagna region in Italy. The estimation results confirm the calibration ability of the model and reveal the values of the individual risk aversion coefficients. We use the model to simulate different scenarios of crop price volatility, in order to explore the potential risk management role of an agri-environmental scheme. |
The revealed preferences of Baltic Sea governments: Goals, policy instruments, and implementation of nutrient abatement measures (2017) 🗎🗎 | Nitrogen and phosphorus loads are considered a major reason for the eutrophication of the Baltic Sea. Until now, most of the abatement has been made at point sources while the implementation of policies for nonpoint sources has not led to equally large reductions in emissions. The purpose of this study is to investigate the determinants of how nutrient abatement measures are implemented by countries in the agricultural sector of the Baltic Sea region. We investigate how goal setting, policy instrument choice, and the level of implementation is determined by characteristics of the abatement measure as well as socio-economic characteristics of the country where it is implemented. Econometric analysis of a cross-sectional data set suggests that income, institutional capacity, and economies of scope in abatement and enforcement are important determinants of policies developed and their implementation. (C) 2017 The Authors. Published by Elsevier Ltd. |
Erosion mitigation in the Waikato District, New Zealand: economic implications for agriculture (2017) 🗎🗎 | Soil erosion, in its various forms, is caused or aggravated by agricultural activities. Mitigation of surface erosion comprises the construction of shelterbelts, fencing, riparian buffering, and stock reduction. Mitigation of mass-movement erosion, in turn, takes the form of spaced planting of trees to maintain a persistent, healthy, and complete ground cover. In this article, we assess the economic implications to agriculture of the adoption of mitigation alternatives for erosion control in the Waikato District, New Zealand. The Waikato District presents a spatial pattern of erosion that affects profitability of dairy, and sheep and beef enterprises. We use the Universal Soil Loss Equation and the New Zealand Empirical Erosion Model to estimate erosion figures that are then fed into an economic-focused, nonlinear, partial equilibrium mathematical programming model of New Zealand land use. Different scenarios are constructed for surface and mass-movement soil erosion targets ranging from 0% to 50% below baseline levels. We find that achieving surface erosion targets is more expensive than mass-movement targets, and results in different responses in regional-level costs, land use, enterprise net revenue, and adoption of mitigation alternatives. |
Investigating rice farmers' preferences for an agri-environmental scheme: Is an eco-label a substitute for payments? (2017) 🗎🗎 | In some Asian countries, the pursuit of high yields often leads to excessive application of chemical fertilizer, negatively impacting the environment. We use the Choice Experiment approach to investigate the preferences of rice farmers in Taiwan for a potential Agri-environmental Scheme (AES), which would aim at an optimization of fertilizer use. We are especially interested in how such an AES would optimally be designed and whether it is possible to reduce its costs by offering the farmers lower payments in exchange for an eco-label. We find that farmers have a significant preference for an eco-label and would accept lower payments in exchange. They also prefer to retain some flexibility and keep some land out of the AES. Moreover, we also find that a share of the farmers would never join an AES. (C) 2017 Elsevier Ltd. All rights reserved. |
The US Conservation Reserve Program: The evolution of an enrollment mechanism (2017) 🗎🗎 | The United States Department of Agriculture's Conservation Reserve Program (CRP) has evolved from near open enrollment, to competitive enrollment, and now to a mixture of competitive and targeted enrollment. This paper reviews the history of the CRP and the evolution of its enrollment mechanism. I discuss the use of bid caps and the Environmental Benefits Index bid ranking mechanism in the "general" CRP; and the use of highly targeted, but non-competitive, "continuous" CRP. Possible challenges of these designs are discussed, and alternative auction mechanisms are considered that could be more cost effective. Published by Elsevier Ltd. |
Annual bioenergy crops for biofuels production: Farmers' contractual preferences for producing sweet sorghum (2017) 🗎🗎 | Dedicated annual sorghum crops, such as sweet sorghum or energy sorghum, may provide an option for farmers to supply cellulosic feedstocks for biofuel production and help the industry meet government mandates. Kansas farmers are poised to be major producers of sweet sorghum for biofuels due to favorable agro-ecological conditions. The purpose of this paper is to assess Kansas farmers' willingness to grow sweet sorghum under contract as a feedstock for biofuel production. The paper examines farmers' willingness-to-pay for contract attributes and the impact of socio-economic factors on their willingness to-pay for these attributes. A stated choice survey was administered to Kansas farmers to assess their willingness to grow sweet sorghum for biofuels under various contracting scenarios. Results show that farmers may be willing to grow biomass for bioenergy under contract, but may have varying preferences for the importance of contract attributes such as net returns, contract length, insurance availability, government incentives, and potential for biorefinery harvest options based on socio-economic characteristics of growers. (C) 2016 Elsevier Ltd. All rights reserved. |
Agricultural Cost Sharing and Water Quality in the Chesapeake Bay: Estimating Indirect Effects of Environmental Payments (2017) 🗎🗎 | This article analyzes the effect of agricultural cost sharing for cover crops on the acres of three conservation practices. A survey of farmers from Maryland is used to estimate the direct effect of cover crop cost sharing on the acres of cover crops, and the indirect effect of cover crop cost sharing on the acres of two other practices: conservation tillage and contour/strip cropping. A two-stage simultaneous equation approach is used to correct for voluntary self-selection into cost-sharing programs, and to account for substitution effects among conservation practices. Using model parameters from the U.S. Environmental Protection Agency's Chesapeake Bay Program, the estimated effects of cost sharing are then translated to pollution reduction in order to quantify water quality benefits. The results indicate that the large cover crop cost sharing effort in Maryland had considerable effects on cover crop acreage, substantially reducing nitrogen and phosphorus runoff. Moreover, after accounting for the indirect effects on conservation tillage, the cost per pound of phosphorus abatement in the Chesapeake Bay decreased by between 60-67%. |
The cost effectiveness of payments for ecosystem services-Smallholders and agroforestry in Africa (2018) 🗎🗎 | Certain smallholder farmers in parts of sub-Saharan Africa engage in conservation agriculture and participate in agroforestry ecosystem services schemes that generate additional on-farm revenues through payment for ecosystem services (PES). However, smallholder farmers that are inadequately compensated for the foregone income from agricultural production due to marginal ecosystem services provision have no incentive to participate. On the other hand, over-compensating participating farmers will also lead to PES schemes inefficiencies. Therefore, stakeholders are confronted with the challenge of evaluating farm-level interactions between agricultural production and ecosystem services' provision when making strategic decisions on the efficient level of compensation. We propose in this contribution to assess the efficiency of PES schemes by measuring the marginal cost of ecosystem services based on farm level bio-economic interactions. The quantitative assessment is based on a theoretical classification of the relationship between marketed agricultural output and ecosystem services into complementary, supplementary or competitive. We use a flexible transformation function and cross-sectional data on 120 surveyed smallholder farmers with agroforestry certification in rural Mount Kenya. The results suggest that the joint production (of agricultural output and ecosystem services) for a substantial number of smallholder farms in Kenya may not show a complementary relationship. The biophysical linkage between marketed outputs and ecosystem services strongly influences the marginal cost of ecosystem services. PES schemes could become more efficient if they would target smallholder farms based on the aforementioned classifications by offering a range of contracts to encourage competitive bidding. |
DEREGULATION AND PRODUCTIVITY: EMPIRICAL EVIDENCE ON DAIRY PRODUCTION (2018) 🗎🗎 | We investigate productivity development and its relation to resource reallocation effects in the dairy sector in southeast Germany during the phasing-out of the European Union milk quota. We hypothesize that both extreme output price levels and market deregulation fostered efficient reallocation of production resources. We use a farm-level dataset containing financial accounting data for a period of 15 years. Farm-level productivity is estimated by a proxy variable approach that is robust to endogenous input choice. We compare this approach to other estimation techniques as well as an index-based analysis. After aggregation we decompose sector productivity into unweighted mean productivity and a covariance term measuring the allocation of resources toward more productive farms. We observe an increase in the covariance term coinciding with a period of deregulation efforts and volatile milk prices. We seek to find support for our hypotheses by a regression analysis linking the measure for the potential covariance between resource reallocation and productivity on the one hand, and deregulation as well as price variability on the other. In this analysis we find some empirical evidence for the hypotheses. |
The asymmetric response of farmers to an expected change in the price of rubber: The roles of sunk costs and path dependency (2018) 🗎🗎 | This study examines the impacts of sunk costs and path dependency of rubber farming on farmers' production responses to expected changes in the price of rubber based on a simple choice experiment implemented in the upper Mekong region in March, 2013. The results show that nearly 73% of farmers choose to adjust their production behaviors when the price of rubber is hypothesized to increase by 50%, while only approximately 55% choose to adjust their behaviors when the price of rubber is hypothesized to decrease by 50%. The responses of farmers to these two hypothetical changes in the price of rubber are significantly asymmetric. The estimation results of empirical models consistently indicate that higher sunk costs and a longer path dependency of rubber farming significantly hinder the probability that smallholders will adjust their production behaviors in response to the two hypothetical changes in the price of rubber. The significant difference in the impacts of sunk costs and path dependency on the choice of response behaviors under the two hypothetical situations may, to some extent, help explain the observed asymmetric responses. Additionally, the impacts of sunk costs and path dependency on the specific adjustments to production behaviors are heterogeneous. The findings provide essential empirical evidences for the roles of sunk costs and path dependency in farmers' production behaviors in the context of the price volatility of agricultural products. |
Nationwide shift to grass-fed beef requires larger cattle population (2018) 🗎🗎 | In the US, there is growing interest in producing more beef from cattle raised in exclusively pasture-based systems, rather than grain-finishing feedlot systems, due to the perception that it is more environmentally sustainable. Yet existing understanding of the environmental impacts of exclusively pasture-based systems is limited by a lack of clarity about cattle herd dynamics. We model a nationwide transition from grain-to grass-finishing systems using demographics of present-day beef cattle. In order to produce the same quantity of beef as the present-day system, we find that a nationwide shift to exclusively grass-fed beef would require increasing the national cattle herd from 77 to 100 million cattle, an increase of 30%. We also find that the current pastureland grass resource can support only 27% of the current beef supply (27 million cattle), an amount 30% smaller than prior estimates. If grass-fed systems include cropland-raised forage, a definition that conforms to typical grass-fed certifications, these supplemental feeds can support an additional 34 million cattle to produce up to 61% of the current beef supply. Given the potential of forage feed croplands to compete with human food crop production, more work is required to determine optimal agricultural land uses. Future US demand in an entirely grass-and forage-raised beef scenario can only be met domestically if beef consumption is reduced, due to higher prices or other factors. If beef consumption is not reduced and is instead satisfied by greater imports of grass-fed beef, a switch to purely grass-fed systems would likely result in higher environmental costs, including higher overall methane emissions. Thus, only reductions in beef consumption can guarantee reductions in the environmental impact of US food systems. |
Do Nutrient Management Plans Actually Manage Nutrients? Evidence from a Nationally-Representative Survey of Hog Producers (2018) 🗎🗎 | A nutrient management plan (NMP) specifies recommended practices to match applied nutrients with crops' uptake capacity. Because monitoring nutrient applications is difficult, regulators instead oversee NMP adoption. In this paper we examine whether having NMPs make hog farms more likely to adopt nutrient management practices. We estimate nutrient application and uptake rates to assess whether operations with NMPs are less likely to over-apply nutrients. Using an endogenous treatment effects model to control for potential confounding and selection bias, we find that NMPs are positively correlated with the adoption of nutrient management practices, as well as with the reduced application of excess nutrients. |
Feebates for dealing with trade-offs on fertilizer subsidies: A conceptual framework for environmental management (2018) 🗎🗎 | Approximately half of today's annual worldwide crop yields can be attributed to the application of mineral fertilizers. Globally, we rely and depend on additional yields as a cornerstone of present and future global food security. In areas with very low nutrient loads, subsidies for appropriate and responsible fertilizer use may help farmers to increase their yields and improve soil fertility. In many countries of the world, fertilizer subsidies are applied as direct payments; however, they have also become an environmental risk factor. We deliberate in what way(s) maximizing the farmer's economic yield conflicts with maximizing societal interests. We show (mathematically) that, from the perspective of a single farmer, under the assumption that crop yields increase monotonically with the application of fertilizers, any fertilizer subsidy provides an economic incentive to increase the application of fertilizer, independent of the amount that has already been applied. We suggest feebate systems (i.e., fee- and rebate-based mechanisms like penalty taxes and subsidies based on a specific reference point or borderline) as an economic strategy for regulating both over- and under-fertilization. This acknowledges the various roles that subsidies have played historically, ranging from agricultural systems that have generally over-fertilized, such as urban agriculture in China, Vietnam, or Indonesia, to countries where fertilizer subsidies are provided to compensate for significant land degradation. In order to connect feebates to fertilization based on a sustainable reference or borderline, we provide a conceptual, multilevel environmental and sustainability assessment that is linked to conventional and market-based economic means, such as farm-specific feebates or cap and trade. (C) 2018 Elsevier Ltd. All rights reserved. |
Assessment of greenhouse gas emissions from agricultural sources in order to plan for needs of low carbon economy at local level in Poland (2018) 🗎🗎 | Agriculture is often not included in the baseline greenhouse gas (GHG) emission inventories created for local low carbon economy plans in Poland and other European countries. We therefore estimate the size of the carbon footprint from agricultural sources and indicate the share of agriculture in the total GHG emissions in selected Polish communes (LAU level 2). We propose a solution whereby local government units can estimate their carbon footprint independently and monitor the impact of actions taken to reduce emissions. The value of the carbon footprint from agriculture in the selected communes varies from .5 to 46.5 thousand Mg CO(2)eq/year, with a mean value of 12.6 thousand Mg CO(2)eq/year and a standard deviation of 11.4 thousand Mg CO(2)eq/year. Per capita, these values range from 10 kg CO(2)eq/year to 8.4 Mg CO(2)eq/year, with a mean of 1.1 Mg CO(2)eq/year and a standard deviation of 1.5 Mg CO(2)eq/year. In all communes, the contribution of agriculture to total emissions is at an average of 14% (values range from .2 to 57.4%). The obtained results confirm the appropriateness of including emissions from the agricultural sector and other related sources in low carbon economy plans. |
Fair to the cow or fair to the farmer? The preferences of conventional milk buyers for ethical attributes of milk (2018) 🗎🗎 | Conventional dairy farming has been under pressure for lacking animal welfare, biodiversity loss through abandonment and intensification of grassland, and low milk prices during the 2015/16 milk price crisis. The relatively stable organic milk prices during the milk price crisis indicate that consumers have preferences for product characteristics besides the price. We investigate through a choice experiment the willingness-to-pay (WTP) of German conventional milk buyers for ethical attributes of milk production that address the above mentioned concerns. Respondents have the highest WTP for animal welfare - free-stall plus summer pasture - followed by biodiversity conservation, support for small, below-average income farms, and regional milk production. Respondents also have a positive WTP to support all farms but only in combination with regional production. We further find a positive WTP to support small farms in combination with tethering. This implies animal-welfare concerns are somewhat counterbalanced by fairness aspects. Our insights may support developing labels and agri-environmental policies concerning ethical aspects of conventional milk production. |
Uncertainty-based auto-calibration for crop yield - the EPIC+ procedure for a case study in Sub-Saharan Africa (2018) 🗎🗎 | Process-based crop models are increasingly used to assess the effects of different agricultural management practices on crop yield. However, calibration of historic crop yield is a challenging and time-consuming task due to data limitation and lack of adaptive auto-calibration tools compatible with the model to be calibrated on different spatial and temporal scales. In this study we linked the general auto-calibration procedure SUFI-2 (Sequential Uncertainty Fitting Procedure) to the crop model EPIC (Environmental Policy Integrated Climate) to calibrate maize yield in Sub-Saharan African (SSA) countries. This resulted in the creation of a user-friendly software, EPIC+, for crop model calibration at spatial levels of grid to continent. EPIC+ greatly speeds up the calibration process with quantification of parameter ranges and prediction uncertainty. In the SSA application, we calibrated three sets of parameters referred to as Planting Date (PD), Operation (e.g., fertilizer application, planting density), and Model parameters (e.g., Harvest index, biomass-energy ratio, water stress harvest index, SCS curve number) in three steps to avoid parameter interaction and identifiability problems. In the first step, by adjusting PD parameters, the simulated yield results improved in Western and Central African countries. In the next step, Operation parameters were calibrated for individual countries resulting in a better model performance by more than 40% in many countries. In the third step, Model parameters were calibrated with significant improvements in all countries by an average of 50%. We also found that countries with less socio-political volatility benefited most from the calibration. For countries where agricultural production had trends, we suggest improving the calibration results by applying linear de-trending transformations, which we will explore in more detail in a subsequent study. |
Economic Impacts of Multiple Agro-Environmental Policies on New Zealand Land Use (2018) 🗎🗎 | This paper investigates the implications of policy on farm income, land use, and the environment when New Zealand landowners face multiple environmental constraints. It also looks at the interaction between climate and nutrient reduction policy and the extent to which one policy can be used to meet the other's objectives. We use a non-linear, partial equilibrium mathematical programming model of New Zealand land use to assess the economic impacts of climate and water policies at the New Zealand territorial authority level. The spatially explicit agro-environmental economic model estimates changes in land use, agricultural output, land management, and environmental impacts. The policies investigated include a range of carbon prices on land-based emissions ($0-30/tCO) as well a range of prices on nitrogen leaching from diffuse sources ($0-30/kgN). We estimate that implementing stand-alone greenhouse gas and nutrient emissions reduction policies for the agricultural and forestry sectors will create environmental benefits outside the scope of the policy. However, not all environmental outputs improve, and net farm revenue declines by between 0 and 11%. Simultaneously implementing the two policies results in the desired goals of reductions in nitrogen and greenhouse gas emissions with a marginal economic burden on landowners (i.e. 1-2% additional loss in farm profit relative to a stand-alone policy). |
A Model Approach for Yield-Zone-Specific Cost Estimation of Greenhouse Gas Mitigation by Nitrogen Fertilizer Reduction (2018) 🗎🗎 | Nitrogen use in agriculture has been intensified to feed the growing world population, which led to concerns on environmental harms, including greenhouse gas emissions. A reduction in nitrogen fertilization can abate greenhouse gas emissions, however, it may result in crop yield penalties and, accordingly, income loss. Assessment tools are necessary to understand the dynamics of nitrogen management issues both in environmental and economic aspects and both at low and high aggregation levels. Our study presents a model approach, estimating yield-zone-specific costs of greenhouse gas mitigation by moderate reduction of mineral nitrogen fertilizer application. Comparative advantages of mitigating greenhouse gas emissions by nitrogen fertilizer reduction were simulated for five yield-zones with different soil fertility in the state of Brandenburg, Germany. The results suggest that differences in yield response to nitrogen fertilizer lead to considerable differences in greenhouse gas mitigation costs. Overall cost-efficiency of a regional greenhouse gas mitigation by nitrogen fertilizer reduction can be substantially improved, if crop and yield-zone-specific yield responses are taken into account. The output of this study shall help to design cost-efficient agro-environmental policies targeting with specific crop yield response functions at different sites. |
Economic Targeting of Agricultural Beneficial Management Practices to Address Phosphorus Runoff in Manitoba (2018) 🗎🗎 | The mechanisms used to deliver agricultural beneficial management practices (BMPs) can influence the performance of these policies. Research has suggested that agri-environmental instruments targeted based on specific economic or environmental characteristics can improve policy performance. Using a case study approach, we evaluate the relative performance of different mechanisms to target subsidized water retention pond BMPs to reduce phosphorus (P) runoff in an agriculture dominated subwatershed within the Lake Winnipeg watershed in southern Manitoba. The water retention pond BMPs were targeted based on estimated establishment costs (cost targeting), total phosphorus removal from surface water (benefit targeting), and pond-specific benefit-cost ratios. The targeting was simulated using predictions of retention pond-specific P removal from an adapted hydrology model and site-specific pond construction and land opportunity costs assembled in a geographic information system database. Targeting of water retention pond BMPs has an impact on the cost effectiveness of the policy delivery with benefit-cost targeting being the most cost-effective approach. Water retention ponds providing higher P removal at lower cost were smaller in size and on land previously used for the production of lower value crops. |
Evaluating impacts of agricultural cost sharing on water quality: Additionality, crowding In, and slippage (2018) 🗎🗎 | We evaluate three farmer behavioral responses to incentive payments for ecosystem services, specifically a cover crop cost-share program aimed at reducing nitrogen loads in the Chesapeake Bay. Using farmer survey data in Maryland, we estimate a two-stage simultaneous equation model to correct for voluntary enrollment. Econometric model results are integrated with the Chesapeake Bay Program watershed model to estimate nitrogen abatement for the Bay and associated abatement costs. Estimated additionality for nitrogen abatement is 97% for enrolled farmers when only the direct treatment effect on cover crops is taken into account, but reductions in vegetative cover (slippage) and indirect effects on conservation tillage are consequential. Slippage is particularly large among farmers not currently enrolled in the program, indicating that loss of vegetative cover may substantially offset pollution abatement if cost sharing is extended to this group. These findings suggest that unenrolled farmers may not be a low-cost source of pollution abatement as is often assumed. (C) 2018 Elsevier Inc. All rights reserved. |
The Potential for Cross-Compliance in Canadian Agricultural Policy: Linking Environmental Goals with Business Risk Management Programs (2018) 🗎🗎 | Environmental cross-compliance links agricultural program payments to producer commitments to achieve agri-environmental policy goals. The objective of this study is to determine the feasibility of using cross-compliance to achieve environmental goals in a Canadian policy context. While Canadian policy makers have flirted with cross-compliance, with the exception of phosphorus regulations for Quebec hog farms, they have never adopted this approach. The potential for effective cross-compliance depends on producer participation, producer compliance with regulations, environmental performance, and overall welfare implications. This study reviews the application of cross-compliance in the United States and EU with regard to the potential application to Canadian agriculture. Policy options are considered which link current business risk management (BRM) programs to alternative environmental regulations (wildlife habitat preservation, nutrient management plans, and beneficial management practices for nutrient management). In general, individual Canadian agricultural support program do not provide sufficient incentives for farmers to participate in cross compliance. However, if support programs are combined, it is better to link programs that redistribute income, with environmental programs, than to link agriculture programs that already address specific market failures. |
The Impact of Agri-Environmental Policies and Production Intensification on the Environmental Performance of Dutch Dairy Farms (2018) 🗎🗎 | This study examines the impact of policies and intensification on the environmental performance of Dutch dairy farms in the period 2001-2010 using a hyperbolic distance function. The results indicate that the change from the Mineral Accounting System to the combination of the Application Standards Policy with decoupled payments has not significantly changed farms' hyperbolic efficiency. Farms receiving agri-environmental and animal welfare payments are less hyperbolically efficient than those that do not, highlighting greater decreases in desirable outputs than decreases in undesirable outputs. Finally, intensification increases hyperbolic efficiency, suggesting that intensive practices may increase production without harming the environment. |
Improving agricultural pollution abatement through result-based payment schemes (2018) 🗎🗎 | Action-based payments that compensate farmers for adopting land-management measures to preserve and enhance the environment have been criticized for being ineffective. The root of the problem is that farmers are not paid for achieving a desired environmental benefit, but compensated for their costs of management. There is growing interest in formulating result-based economic incentives. By paying for an environmental benefit and allowing flexibility in how to achieve it, farmers are given an incentive to exploit their comparative advantages for achieving a desired environmental benefit cost-effectively. However, the feasibility and relative effectiveness of result-based payments for reducing agricultural pollution is contentious. In this study, we designed and evaluated a result-based payment scheme for nonpoint-source pollution abatement from arable land. In a case study in southern Sweden, the cost-effectiveness of the new scheme was compared with that of an existing action-based scheme for vegetated buffer strips to prevent the pollutant, particulate phosphorus, from reaching water resources. The results suggest that result-based payment schemes based on modeled outcomes of pollution abatement are feasible and will considerably improve cost-effectiveness compared to action-based schemes, by relocating buffer strips to where they are more effective and not simply where they have the lowest costs for farmers. |
Policy schemes for the transition to sustainable agriculture-Farmer preferences and spatial heterogeneity in northern Thailand (2018) 🗎🗎 | Thailand has become one of the biggest exporters of agricultural products and the majority of the poor households rely on agriculture as their main source of income. Recent droughts and flooding have affected the agricultural farms especially in the upland areas of northern Thailand. Incentive based policies can play an important role in conservation and protection of agroecosystems. Hence, this paper applies a Choice Experiment approach to elicit small scale farmers' preferences for a potential payment policy scheme. Latent class models were used to analyse the farmers' responses to investigate their preferences, heterogeneity in preferences and the willingness to accept compensations. The results reveal that farmers are willing to participate in the proposed payment for ecosystem services (PES) scheme; however, overall the farmers show an aversion to drastic changes in their farming activities. The analysis suggests that majority of the farmers prefer schemes which require moderate reduction in chemical use and have shorter contract lengths. Furthermore, the study also provides cost comparisons of various policy combinations and variation in spatial patterns of the welfare estimates, which are useful for identifying the target areas for effective implementation of policy schemes. |
Assessment of the European Common Agricultural Policy and landscape changes: an example from Slovenia (2018) 🗎🗎 | The objective of this study was to determine whether and to what extent Common Agricultural Policy (CAP) measures actually succeed in preserving the diversity of agricultural landscapes. This paper assesses the effects of agricultural policy on changes in the diversity of agricultural landscapes in Slovenia. Diversity is measured by the Shannon index and the Simpson index, while the impacts were estimated using a spatial lag model. The results show that direct payments decrease landscape diversity by 2 index points per 1 000 EUR/ha, but agri-environmental payments for reducing negative impacts on the environment and those for nature conservation increase agricultural landscape diversity by 2.8 index points and 12.30 index points per 1 000 EUR/ha, respectively. Furthermore, we did not find any statistically significant effects of habitat protection payments on landscape diversity. Since direct payments are almost four times larger on average as agri-environmental payments, they preserve landscape diversity only to a limited extent. |
Modelled impacts of policies and climate change on land use and water quality in Austria (2018) 🗎🗎 | Climate change is a major driver of land use with implications for the quality and quantity of water resources. We apply a novel integrated impact modelling framework (IIMF) to analyze climate change impacts until 2040 and stakeholder driven scenarios on water protection policies for sustainable management of land and water resources in Austria. The IIMF mainly consists of the sequentially linked bio-physical process model EPIC, the regional land use optimization model PASMA(gricl], the quantitative precipitation/runoff TUW-model, and the nutrient emission model MONERIS. Three climate scenarios with identical temperature trends but diverging precipitation patterns shall represent uncertainty ranges from climate change, i.e. a dry and wet situation. Water protection policies are clustered to two policy portfolios WAP _I and WAP_II, which are targeted to regions (WAP_I) or applied at the national scale (WAP_II). Policies cover agri-environmental programs and legal standards and tackle management measures such as restrictions in fertilizer, soil and crop rotation management as well as establishment of buffer strips. Results show that average national agricultural gross margin varies by +/- 2%, but regional impacts are more pronounced particularly under a climate scenario with decreasing precipitation sums. WAP_I can alleviate pressures compared to the business as usual scenario but does not lead to the achievement of environmental quality standards for P in all rivers. WAP_II further reduces total nutrient emissions but at higher total private land use costs. At the national average, total private land use costs for reducing nutrient emission loads in surface waters are 60-200 E/kg total N and 120-250 E/kg total P with precipitation and the degree of regional targeting as drivers. To conclude, the IIMF is able to capture the interfaces between climate change, land use, and water quality in a policy context. Despite efforts to improve model linkages and the robustness of model output, uncertainty propagations in integrated modelling frameworks need to be tackled in subsequent studies. |
Do European Agri-environment Measures Help Reduce Herbicide Use? Evidence From Viticulture in France (2018) 🗎🗎 | Agri-environmental schemes (AES) are a central component of the European environmental policy, but few of these schemes have been carefully evaluated and doubts are often expressed about their effectiveness. We use original data collected from winegrowers who participated in an AES targeting non-point source pollution from herbicides in 2011 and 2012 in the South region of France. Using the variation in the implementation of the scheme across time and space and a matching approach, we show that the quantity of herbicides used by participants in the scheme in 2011 ranges from 38 to 53% below what they would have used without the scheme and this percentage is between 42 and 50% in 2012. Further, our results suggest that least demanding AES options are effective in avoiding pollution peaks when weed pressure is high, whereas more demanding AES options guarantee an overall reduction in herbicide use, even during relatively easy fanning years in which less weed pressure is experienced. |
The Effect of Carbon Tax on Farm Income: Evidence from a Canadian Province (2019) 🗎🗎 | British Columbia (BC) introduced North America's first carbon tax in 2008. An analysis of the impact of the BC carbon tax is of interest to various stakeholders in the jurisdiction where the tax was implemented. Other Canadian provinces and other countries contemplating a carbon tax policy are looking for insights on how to optimize potential positive and negative consequences. Given that government agri-environmental policies often emphasize farm-level support and environmental performance, there is interest in understanding the farm-level impacts of the carbon tax. The effect of the BC carbon tax on farm income and related production cost variables is investigated. Panel data from 2000 to 2015 are analyzed using both tabular and econometric approaches of the difference-in-difference method. The results indicate that the carbon tax is associated with a decline in net farm income-to-receipts ratios ranging between 8 and 12 cents per dollar of farm receipts. The analysis for costs-to-receipts ratios suggest that the carbon tax is directly related to higher commercial feed costs, farm labour costs, interest costs, and depreciation costs. Results of the regression analysis indicate that all the carbon tax effects are highly statistically significant. These findings can inform policy discussions about carbon tax effects on farmers. |
Mitigation of CO2 and N2O Emission from Cabbage Fields in Korea by Optimizing Tillage Depth and N-Fertilizer Level: DNDC Model Simulation under RCP 8.5 Scenario (2019) 🗎🗎 | In this study, we applied the Denitrification and Decomposition model to predict the greenhouse gas (GHGs; CO2 and N2O) emissions and cabbage yields from 8072 cabbage fields in Korea in the 2020s and 2090s. Model outputs were evaluated as a function of tillage depth (T1, T2, and T3 for 10, 20, and 30 cm) and fertilizer level (F1, F2, and F3 for 100, 200, and 400 kg N ha(-1)) under the Representative Concentration Pathways 8.5 climate change scenario. For both time periods, CO2 emissions increased with tillage depth, and N2O emissions were predominantly influenced by the level of applied N-fertilizers. Both cabbage yields and GHGs fluxes were highest when the T3F3 farming practice was applied. Under current conventional farming practices (T1F3), cabbage yield was projected at 64.5 t ha(-1) in the 2020s, which was close in magnitude to the predicted cabbage demand. In the 2090s, the predicted cabbage supply by the same practice far exceeded the projected demand at 28.9 t ha(-1). Cabbage supply and demand were balanced and GHGs emissions reduced by 19.6% in the 2090s when 94% of the total cabbage farms adopted low carbon-farming practices (e.g., reducing fertilizer level). Our results demonstrate the large potential for Korean cabbage farms to significantly contribute towards the mitigation of GHGs emissions through the adoption of low-carbon farming practices. However, in order to incentivize the shift towards sustainable farming, we advise that lower yield and potential economic losses in farmlands from adopting low-carbon practices should be appropriately compensated by institutional policy. |
Quantity based indicators fail to identify extreme pesticide risks (2019) 🗎🗎 | As a matter of policy, minimizing human health and environmental risks associated with pesticide use is a major challenge but necessary for improving agricultural sustainability. Efficient and effective policies that encourage the use of less risky pesticides, such as pesticide taxes, necessitate a precise and realistic quantification of potential adverse effects. Various indicators are currently utilized in policies and they focus mainly on a purely quantitative dimension of the pesticides used, which can lead potentially to unfavorable outcomes of pesticide policies. A unique dataset applied to pesticide use by Swiss farmers in winter wheat and potato production, demonstrates that on average the two most important quantitative indicators show a significant correlation with pesticide risks as expressed by the Danish Load Indicator. However, they have almost no explanatory power for extreme risks (e.g. most intensive use patterns for pesticides with unfavorable toxicity profiles). Results remain stable over a range of aggregation levels, from application-to farm-level indicators of pesticide use. These findings render the commonly used, quantitative indicators ineffective to reduce potential environmental and human health risks of pesticides and, in the worst case, lead to misinformed market-based pesticide policies consequential to National Action Plans. (C) 2018 Elsevier B.V. All rights reserved. |
CAP's environmental policy and land use in arable farms: An impacts assessment of greening practices changes in Italy (2019) 🗎🗎 | The study assesses the possible impact of first pillar reform of the Common Agricultural Policy by focusing on the new greening rules defined by the recent Omnibus regulation. The analysis was carried out on a Farm Accountancy Data Network sample of Italian farms using by a Positive Mathematical Programming model. Moreover, our analysis is stratified by geographical area and altimetric level and uses some additional environmental and social indicators beyond those economic. The results indicate that the new greening rules generate positive but limited environmental impacts, which reinforce those already determined by the previous CAP reform, for example the use of chemical fertilizers is further reduced. These additional positive environmental impacts are obtained with very limited income reductions. Yet, the impacts on the various geographical areas and their altimetric levels are different, and sometimes controversial. For example, there is a growth in the use of pesticides in the northern plains, due to the increase in rice and soybean areas. On the other hand, agricultural employment in Southern Italy decreases, where agriculture is an important source of employment for the rural population. This reduction also affects the mountain areas, thus accentuating the already high risk of abandonment. All this suggests that more targeted measures will have to be implemented in the future planning of agricultural policy, so as to shape the various actions according to the characteristics of the various rural areas, as well as to the specific priorities of the Member State. (C) 2018 Elsevier B.V. All rights reserved. |
Farmers' preferences for nutrient and climate-related agri-environmental schemes: A cross-country comparison (2019) 🗎🗎 | We use data from a survey of 2439 farmers in 5 countries around the Baltic Sea (Denmark, Estonia, Finland, Poland and Sweden) to investigate their preferences for adopting agricultural practices aimed at reducing nutrient leaching and greenhouse gas emissions. The measures considered are set-aside, catch crops and reduced fertilization. Contracts vary with respect to the area enrolled, contract length, possibility of premature termination, availability of professional advice and compensation. We quantitatively describe farmers' preferences in terms of their willingness-to-accept compensation for specific attributes of these contracts, if implemented. The results vary substantially between farm types (farmers' characteristics) and between the 5 countries, and support differentiation of contract obligations and payments to improve the uptake of Agri-Environmental Schemes. The results can be readily used to improve the design of country-specific nutrient reduction policies, in accordance with the next Common Agricultural Policy. |
Farmers' willingness to accept payments for ecosystem services on agricultural land: The case of climate-smart agroforestry in Ethiopia (2019) 🗎🗎 | This study examines smallholder farmers' preferences for the uptake of contractual climate-smart agroforestry, which yields economic and ecosystem benefits. A discrete choice experiment was conducted with smallholder farmers in Ethiopia to elicit their willingness to participate in a payment for ecosystem services (PES) scheme that incentivizes integrating faidherbia albida (a fertilizer tree) in their mono-cropping farming system. Attributes evaluated are "number of planted trees", "payment amount", "payment type", and "contract period". The presence of heterogeneity in the choice behavior of farmers warrants the use of the generalized multinomial logit and latent class conditional logit models to allow for farmer-and class-specific preferences, respectively. The results show that farmers derive higher utility from up-front payments. Farmers also strongly prefer food as the mode of payment than cash. Moreover, low numbers of mandatory planted trees and short-term contracts are found to be essential attributes that positively affect farmers' decisions to take-up a contractual arrangement to grow trees on their agricultural land. Our analysis also shows the presence of heterogeneity in preferences across segments of farmers in conjunction with differences in household characteristics. These findings shed light on the considerations that must be accounted for when designing and implementing environmental policies such as PES schemes that promote large-scale adoption of climate-smart agroforestry, which would transform smallholder agriculture into a sustainable farming system. |
Sensitivity Analysis of a Regional Nutrient Budget Model for Two Regions with Intensive Livestock Farming in Korea (2019) 🗎🗎 | Nutrient budget is one of the Organization for Economic Co-operation and Development (OECD) agri-environmental indicators. A model was developed for regional nutrient management in Korea. In this study, a sensitivity analysis of parameters of a nutrient budget model was performed for two regions with intensive livestock farming in Korea. In the nitrogen budget, gross nitrogen surplus (GNS) and hydrospheric nitrogen surplus (hNS) were analyzed separately. For GNS, the most influential parameters were excreta production per swine in Hongseong and excreta production per beef cattle in Anseong. For hNS, N content of solid manure in swine and beef cattle were the most influential. For GNS and phosphorus surplus (PS), excreta production per livestock and the N(P) in the excreta of livestock were the predominant parameters. Livestock excreta showed a high sensitivity in both areas because the livestock headcount was high; thus, the excreta accounted for a large share of the input parameters for the model. Therefore, calculating reliable regional nutrient budgets would require further research on excreta production per livestock and the N(P) excretion in livestock. The nutrient budget model could be implemented for agri-environmental policy e. g., environment friendly regional livestock farming and sustainable integrated crop livestock systems. |
Innovation as a policy strategy for natural resource protection (2019) 🗎🗎 | Growing global food demands place major strains on water resources, including quality impairments and increased water scarcity. Drawing on the largely separate bodies of literature on externalities and technological innovation, this article develops a dynamic framework to explore the long-term impacts of alternative policy approaches to the agricultural impacts on water resources. Environmental policies, which focus on correcting environmental externalities, lead to an overall gain because costs to farmers are more than offset by reduced environmental damages. Technology policies, which direct public investments into agricultural eco-innovations, lead to benefits for farmers as well as the environment. Joint implementation of both types of policies leads to the largest overall gain. In principle, a technology policy alone could have greater environmental benefits than an environmental policy alone. This outcome is most likely in cases where the productivity effect of new technology is large and the cost of research is low. Recommendations for research managers As an alternative to traditional environmental policy, investments in research can provide win-win solutions that benefit the environment and agricultural producers. Conceivably, eco-innovations could lead to environmental conditions that are better than those achieved by environmental policy alone. Adding research investments to existing environmental policy would lead to further improvements in environmental quality while also benefitting farmers. Unlike environmental policies that are perceived to impose costs on agriculture, technology policies impart benefits to farmers and are less likely to face political opposition from industry. Technology policies are likely to be the most effective when eco-innovation leads to technologies that meaningfully reduce environmental impacts and also raise farm productivity. |
Adoption of agricultural management for Great Barrier Reef water quality improvement in heterogeneous farming communities (2019) 🗎🗎 | There is growing recognition that coastal water quality is interdependent with agricultural management in coastal catchments. Economic-incentive-based instruments can be used to internalize the negative externalities from coastal water pollution. Bio-physical and socio-economic heterogeneity across farms is expected to be an important factor in explaining differing rates of adoption of management practices. This paper hypothesises that: i) different types of farmers are likely to respond differently to incentive payments that promote the adoption of management practices for Great Barrier Reef water quality improvement, and ii) if policy makers account for heterogeneity, cost-effectiveness of incentive payments will increase. Results show that if government paid farmers 100% of the transition costs of moving from their current practices to improved practices, and given current technologies, water quality improvement for the case-study region would be approximately 56% (measured as a reduction of dissolved organic nitrogen at the end of river). Total costs for the region would be almost AU$ 30 M over the planning horizon of one cropping cycle of 6 years. Results furthermore show that as the policy seeks more ambitious land-use changes, from common practice to improved practice to aspirational practice, the public cost of incentive payments increase at an exponential rate. Larger farms make the shift sooner as they are able to offset fixed investments against increased revenues over greater areas. |
Multiple-pollutant cost-efficiency: Coherent water and climate policy for agriculture (2019) 🗎🗎 | We examine the abatement costs for water and climate pollutants and their respective policies while accounting for cobenefits. We construct private and social marginal cost curves for reducing greenhouse gas emissions and nutrient runoff in Finnish agriculture. We find that the social marginal costs of reducing emissions that reflect the cobenefits are lower than the private costs. Accounting for greenhouse gas cobenefits from nutrient load reduction or water cobenefits from climate emissions reduction creates a gap between privately and socially optimal reduction levels. This gap varies depending on the valuation of cobenefits. The cost-efficient reduction of the focus pollutant is increased when cobenefits from the other pollutant are accounted for. For policies, this implies a higher cap or tax on the focus pollutant. We decompose the optimal tax rate to a basic tax on the focus pollutant and on an additional tax component depending on the level of cobenefits. |
Spatial analysis of dairy yields response to intensive farming in New Zealand (2019) 🗎🗎 | Purpose The New Zealand (NZ) dairy industry faces the challenge of increasing productivity and dealing with public concerns over nutrient pollution. The effective policy needs to address regional differences in productivity and fertilizer use. The purpose of this paper is to investigate how spatial effects influence the relationship between dairy yields and intensive farming practices across regions in NZ. Design/methodology/approach This paper employs spatial panel data models to establish whether unobserved spatial effects exist in the relationship between dairy yields and nutrient inputs regionally and nationally using 2002, 2007 and 2012 data from Statistics NZ and DairyNZ. Findings The results show positive spatial spillovers for most intensive inputs. The high level of effluent use and estimated negative yield response to nitrogen suggests that an opportunity exists for greater use of effluent as a substitute for nitrogenous fertilizer. Substitution has the potential to reduce dependence on fertilizer and contribute to a reduction in the nutrient pollution. Originality/value This paper is the first empirical application of spatial econometric methods to examine the spatial relevance of dairy yields and intensive farming in NZ. In particular, the spatial panel data model accounts for cross-sectional dependence and controls for heterogeneity. The results contribute to an understanding of how farmers can improve their management of intensive inputs and contribute to the formation of regional environmental policy that recognizes regional heterogeneity. |
Bilateral Information Asymmetry in the Design of an Agri-Environmental Policy: An Application to Peatland Retirement in Norway (2019) 🗎🗎 | Agriculture is a significant source of global greenhouse gas (GHG) emissions. GHG mitigation through agri-environmental programmes could be important in achieving emission reduction targets under the 2015 UN climate agreement. This study uses the principal-agent model to examine a peatland retirement programme to reduce agricultural emissions in Norway. The focus is on the role of the government's private information in programme design. Two cases are examined. First, optimal contracts are derived when farmers have private information about the costs of implementing peat land retirement, but the government reveals its information on the resulting public benefits through differentiated contracts. This corresponds to the standard targeting strategy with one-sided information asymmetry. In the second case, an informed principal model developed by Maskin and Tirole in a 1990 study is employed to address bilateral information asymmetry. Using the informed principal model, the government offers the same menu of contracts to farmers in order not to disclose information on the public benefits from land retirement. Empirical results show that the government can achieve a higher payoff by using a pooling offer. |
The Ex-Post Cost-Effectiveness of Nitrogen Load Reductions From Nine Countries to the Baltic Sea Between 1996 and 2010 (2019) 🗎🗎 | Policy efforts to improve Baltic Sea water quality will be expensive if the ambitious targets agreed are to be achieved. The aim of this study is to evaluate the ex-post cost-effectiveness of nitrogen load reductions to the Baltic Sea made between 1996 and 2010. We first calculate the counterfactual change in nitrogen load to the Baltic Sea and compare to observed loads. The costs of the net reductions are evaluated using a Baltic-wide cost-effectiveness model, which includes a wide set of nitrogen abatement measures in the littoral countries. Results show that the net nitrogen reductions achieved through environmental policy, about 145,000 tons total nitrogen, could have been obtained at 12% of the realized cost, through reallocation of abatement between countries. The total budget spent on abatement could, if used in a cost-effective manner, be sufficient for a doubling of the net nitrogen load reduction. Milestone targets, in combination with a compensation scheme between countries, could help to reduce policy costs. |
Price based policies for managing residential development: Impacts on water quality (2019) 🗎🗎 | Land plays a critical role in determining the health of an urban ecosystem. One of its key roles is regulation of nutrient delivery. In this paper, we combine results from an instrumental variable duration model with a water quality model in a series of land use simulations to examine the impact that several hypothetical land use policies have in limiting nutrient delivery in an urban setting. Our results reveal tradeoffs between objectives for managing urban growth and those for managing water quality. A uniform tax on development reduces developed acreage but increases nutrient delivery. An environmental policy designed to retain forest cover is the most effective at mitigating water quality impacts, albeit with the lowest reduction of acreage developed. (C) 2019 Elsevier B.V. All rights reserved. |
Nutrient Trading Between Wastewater Treatment Plants in the Baltic Sea Region (2019) 🗎🗎 | We analyze nutrient trading between wastewater treatment plants as a tool for reducing nitrogen and phosphorus loads in the Baltic Sea. We build a numerical model and demonstrate that the goals of the Baltic Sea Action Plan can be achieved to a fairly large extent by nutrient trading between wastewater treatment plants. It is also a relatively inexpensive way to reduce nutrient loads. Furthermore, a nutrient trading scheme with properly designed initial allocations enables an evening out of the cost burden between wastewater treatment plants. We study alternative types of nutrient trading schemes and show that when trading is based on nitrogen equivalents, phosphorus abatement reaches its capacity limits. Moreover, we illustrate that transaction costs clearly increase the level of nitrogen abatement costs but only slightly the level of phosphorus abatement costs. Nevertheless, even though transaction costs reduce benefits from trading relative to command-and-control, huge cost differences between the installations create space for trading. |
Geographical Analysis of Agro-Environmental Measures for Reduction of Chemical Inputs in Tuscany (2019) 🗎🗎 | The agro-environmental policies included in rural development plans are getting increasing importance in European Community strategies. These policies represent the meeting point between demand and supply of positive externalities. The difficulty of assessing real environmental efficiency is one of the elements characterizing agro-environmental measures. This difficulty is related to the identification of suitable parameters for evaluating farms according to their impact on the territory. This impact is mainly related both to chemical inputs and to the territorial characteristics of the farm. Different types of fertilizers, pesticides and herbicides are currently used in production processes; however, the analysis has focused only on nitrates, as they represent the most critical types of chemicals related to soil pollution. A case study is provided by analysis of agro-environmental measures in Tuscany for the reduction of nitrates in organic and integrated farms. Using spatial multicriteria analysis, integrated and organic farms were classified according to their geographical locations and their release of nitrates into the soil. This classification permits the highlighting of farms that make the greatest economic efforts to reduce pollution and therefore it could determine environmental benefits. Considering that the trend of policy strategies is toward a reduction of monetary resources, the classification could help decision makers choose the right allocation of future resources. |
Valuing Agricultural Landscape: Lithuanian Case Study Using a Contingent Valuation Method (2019) 🗎🗎 | This study analyses Lithuanian residents' willingness to pay (WTP) for the agricultural landscape in Lithuania. Since it is a part of the European Union, the agriculture is supported by the Common Agricultural Policy (CAP). According to CAP, agri-environmental schemes focus on the maintenance and improvement of agricultural landscape. Under these measures, Lithuanian farmers receive payments for the creation of agricultural landscape services. Therefore, understanding the demand of such agricultural landscape services, as received by the society, may help policymakers better allocate the funds. The present study has revealed that Lithuanian residents are concerned about the maintenance and preservation of the agricultural landscape. Moreover, they demand provision of the agricultural landscape services. Application of the contingent valuation method has shown that the median WTP of 23.59 Euro/year per family for agricultural landscape services, which is influenced by socioeconomic characteristics. The findings of the present study provide quantitative information about the demand for agricultural landscape services, which could be used to improve the agri-environmental policy, substantiating the internalization of positive and negative externalities (e.g., agricultural landscape services) to the performance of farmers. |
EXPERIMENTAL EVIDENCE ON POLICY APPROACHES THAT LINK AGRICULTURAL SUBSIDIES TO WATER QUALITY OUTCOMES (2019) 🗎🗎 | y Improving water quality in agricultural landscapes is an ongoing challenge, and most agri-environmental programs in the United States rely on voluntary adoption of conservation practices. Conservation-compliance initiatives require producers to meet specific conservation standards to qualify for payments from farm programs. However, these requirements do not require actual improvements in observed water quality. In this study, we introduce policies to reduce nonpoint source pollution that link eligibility for agricultural subsidies to compliance with water quality goals. We then use economic laboratory experiments to provide empirical evidence related to the performance of these policies. In the policy treatments, participants risk losing some or all of their subsidies if the ambient pollution level exceeds an announced target. A novel feature of our experiment is that we test a policy treatment that ensures that no subsidies are lost if a producer implements a verifiable conservation technology that reduces emissions. In these experiments, policies that link the receipt of subsidies to ambient water quality nearly achieve the socially optimal level of pollution. The results suggest that water quality policies that rely on the threat of subsidy reductions are a potentially viable option for reducing aggregate water pollution. Although a policy that allows polluters to avoid potential losses by implementing a verifiable conservation technology could increase political support for ambient-based policies, our results suggest that, depending upon the magnitudes of social damages from emissions and the cost of implementing a conservation technology, such policies may be less cost-effective for a comparable reduction in pollution. |
Optimal Design of Agri-environmental Schemes under Asymmetric Information for Improving Farmland Biodiversity (2019) 🗎🗎 | Information asymmetry is one of the main obstacles to the effective design and implementation of agri-environmental schemes (AES). The literature has generally addressed this issue through the use of principal-agent models (PAM). We develop a PAM to support optimal design of a new AES for improving farmland biodiversity. We use the results of choice experiments to assess both the costs incurred by the agent for the provision of biodiversity and the resulting social benefits. We also make a number of novel contributions such as the inclusion of a non-linear non-compliance detection curve, a sensitivity analysis to identify which parameter estimates have a critical impact on PAM results, and analysis of the efficiency of different sanction scenarios. The results suggest that: (i) the second-best solutions differ significantly from the optimal solutions attainable with perfect information, with farmers being strongly over-compensated for the extra costs associated with improved biodiversity; (ii) monitoring levels should be higher; (iii) the sanction system should be tougher. Sensitivity analysis shows the need for accurate estimates of the marginal cost of public funds and the costs and benefits associated with the public goods, which represent the key parameters determining PAM results. |
Water Quality Trading in the Presence of Conservation Subsidies (2020) 🗎🗎 | Most studies of water quality trading analyze its cost-effectiveness in isolation from existing policies like conservation subsidy programs that pay farmers to use conservation practices. We investigate the interaction between trading and conservation subsidy programs using an integrated assessment model that combines farmer behavioral responses with a biophysical water quality model. Current subsidy program enrollees with comparative advantage in nitrogen abatement will sort into the trading program, worsening adverse selection. Actual increases in abatement from trading depend on incentivizing additional conservation practice acreage without inducing the conversion of vegetative cover to cropland. |
External Costs of Agriculture Derived from Payments for Agri-Environment Measures: Framework and Application to Switzerland (2020) 🗎🗎 | The costs of unintended side effects of agriculture such as water pollution cannot be directly observed in markets. However, the values society places on healthy agricultural environments are increasingly reflected in payments to farmers for measures to avoid or reduce environmental damage. This paper presents a framework for estimating external costs of agriculture from payment rates of agri-environment measures addressing specific externality issues. The framework is applied to the broad range of agri-environment measures implemented in Swiss agricultural policy. Estimates of external costs are derived for emissions of greenhouse gases, ammonia, nitrate and pesticides, soil erosion, habitat deficits, and animal suffering. The total external costs of Swiss agriculture are estimated at CHF 3.651 billion (CHF 3494 per hectare) when the calculations are based on the agri-environment measures' average avoidance costs and of CHF 5.560 billion (CHF 5321 per hectare) when the calculations are based on highest observed avoidance costs. Potential applications include internalization policies, evaluations of agri-environment support, and integrated environmental and economic accounting. |
Linkages between agricultural policies, productivity and environmental sustainability (2020) 🗎🗎 | Increasing sustainable productivity growth in the food and agriculture sector is a common goal of all OECD and G20 countries. At the same time, an important policy question for many governments is how the current set of agricultural policies affects both productivity growth and environmental performance of the sector. Despite the high relevance of this issue, empirical evidence on the effects of specific types of agricultural support policies on productivity and environmental sustainability is relatively scarce. The present paper seeks to reduce this gap by analyzing the impact of agricultural support policies on sustainable productivity. Drawing on observational data and configurational methods of analysis, our results show that countries achieve high sustainable productivity if livestock density is low and agricultural support payments are either not coupled to production or if such payments have environmental constraints attached. |
Cost-effectiveness of mussel farming as a water quality improvement measure: Agricultural, environmental and market drivers (2020) 🗎🗎 | This study aims to understand the economic and bio-physical conditions under which mussel farming is a cost-effective mitigation measure to improve water quality related to excess nitrogen in fjords and coastal areas. We set-up a mixed-integer optimization model including every farm in three agricultural catchments surrounding Limfjorden, the largest fjord in Denmark. We include a number of relevant nitrogen abatement measures, including agricultural land-use measures and mussel farming in the sea. The aim is to model the least costly combination of mitigation measures to improve water quality when agricultural, environmental and market conditions vary. We run three scenarios varying environmental conditions for mussel productivity and market opportunities for mussel-based products as organic animal feed. We analyze the resulting marginal abatement costs and draw insights about the potential scale of mussel farming for the different catchments. We show that mussel farming is a cost-effective option for 2 of the 3 catchments, but that decreasing mussel productivity over time may make the measure ineffective for one of the catchments, if a market for feed is not available. The possibility of a market for mussel-based organic feed significantly increases the share of nitrogen reduction done by mussels and decreases overall costs by up to 65%. Ultimately, the results indicate that, for catchments where environmental conditions are adequate, mussel farming can be a cost-effective nutrient reduction measure. Therefore, mussel farming can potentially increase the cost-effectiveness of incentive schemes aimed at reducing eutrophication in fjords and coastal waters. |
A double win: new pathways to reduce greenhouse gas emissions and improve water quality in New Zealand (2020) 🗎🗎 | Y This paper explores potential land-sector policies and practices that could help meet New Zealand's 2030 Paris Agreement target of reducing their greenhouse gas emissions by 30% from 2005 levels while simultaneous achieving improvements in freshwater quality. We use an integrated model of the country's agricultural and forestry sectors to explore the economic and environmental outcomes for 21 freshwater and climate change policy alternatives and mitigation target scenarios. The agri-environmental model estimates are then included in a multidimensional decision space framework that incorporates the risk attitude of policy-makers and uses an ordered weighting average model to evaluate potential policy pathways. We find policies that feature afforestation of marginal land are often preferred over because they provide a range of co-benefits such as carbon sequestration and reduced sedimentation and nutrient loss at relatively low cost. On the contrary, policies that only target a specific practice or pollutant are often less preferred because they fail to provide ample spill overs relative to their cost savings. |
Dairy Farm Management when Nutrient Runoff and Climate Emissions Count (2020) 🗎🗎 | We provide a theoretical framework and detailed bioeconomic simulations to examine privately and socially optimal dairy farm management in the presence of nutrient runoff and greenhouse gas emissions. Dairy farms produce milk by choosing herd size, diet, fertilization and land allocation between crops, as well as (discrete) manure storage and spreading technologies and the number of milking seasons. We show analytically that a critical radius emerges for the choice of land use between silage and cereal cultivation and fertilizer types (mineral and manure). Both privately and socially optimal manure application rates decrease with application distance. We characterize the optimal climate and water policy instruments for dairy farming. A detailed bioeconomic simulation model links farm management decisions with their impacts on climate and water quality. We numerically solve the social and private optima and the features of optimal climate and water policy instruments. We show that using only climate instruments provides considerable water co-benefits, and in the same vein, the use of water quality instruments provides considerable climate co-benefits. Climate policies lead to a reduction in herd size, as measures relating to manure management and spreading are relatively inefficient at reducing climate emissions. There is much more leeway for adapting to water policies than to climate policies, because dairy farms have multiple measures to reduce their nutrient loads. |
Analysing the efficiency of wastewater treatment plants: The problem of the definition of desirable outputs and its solution (2020) 🗎🗎 | Evaluating the efficiency of wastewater treatment plants (WWTPs) is highly relevant to improve their performance from an economic and environmental perspective. The issue is even more critical in countries where WWTPs are benchmarked to regulate water companies and define WWTPs' economic and environmental objectives. Despite the large number of previous studies on this topic, none has considered that the amount of outputs produced by the WWTPs is restricted by the concentration of pollutants in the effluent. To overcome this limitation, the study's main objective was to propose a new variant of the Weighted Russell Directional Distance Model (WRDDM) that would solve problems regarding the usual definition of desirable outputs and the impossibility of removing higher levels of pollutants than those contained in the effluent. To illustrate both the problem of the conventional efficiency assessment models and the usefulness of the alternative model proposed, an empirical application, focused on a sample of WWTPs located in Spain, was conducted. The comparison of the results obtained by the conventional WRDDM and the one proposed in this study demonstrated that WWTP efficiency scores are affected by output selection. Finally, it was shown that only the size of the WWTPs had a statistically significant impact on WWTPs' efficiency levels, suggesting that the plants' design and maintenance should be modified. The conclusions of this study are of great interest for water regulators: they demonstrate the importance of using robust models and variables when evaluating WWTP efficiency and they therefore support decision-making based on reliable results. |
The Assessment of Impacts and Risks of Climate Change on Agriculture (AIRCCA) model: a tool for the rapid global risk assessment for crop yields at a spatially explicit scale (2020) 🗎🗎 | A main channel through which climate change is expected to affect the economy is the agricultural sector. Large spatial variability in these impacts and high levels of uncertainty in climate change projections create methodological challenges for assessing the consequences this sector could face. Crop emulators based on econometric fixed-effects models that can closely reproduce biophysical models are estimated. With these reduced form crop emulators, we develop AIRCCA, a user-friendly software for the assessment of impacts and risks of climate change on agriculture, that allows stakeholders to make a rapid global assessment of the effects of climate change on maize, wheat and rice yields. AIRCCA produces spatially explicit probabilistic impact scenarios and user-defined risk metrics for the main four Intergovernmental Panel on Climate Change's (IPCC) emissions scenarios. |
Trade Imports Increasingly Contribute to Plant Nutrient Inputs: Case of the Finnish Food System 1996-2014 (2020) 🗎🗎 | In Finland, while total agricultural production has remained relatively constant, nutrient input from industrial mineral fertilizers has declined over the past 20 years, which has been the target of environmental policies due to eutrophication risks. From 1996 to 2014, the use of nitrogen (N) declined by 18%, phosphorus (P) by 49%, and potassium (K) by 49%. However, at the same time, the international agricultural products trade has increased dramatically by mass (58%), and Finland has increased imports of food and feed products, such as, protein feeds, vegetables, and fruits. We analyzed the nutrient contents of foreign trade from 1996 to 2014 by using a substance flow analysis. We discovered that, when comparing nutrients contained in trade to the use of fertilizers, the trade of food and feed accounts for more than one-third (40%) of the fertilizer input to the Finnish food system. In 2014, 53 Gg of N, 8 Gg of P, and 15 Gg of K were imported due to trade, equating to 35%, 70%, and 45%, respectively, compared to the use of fertilizers in the food system. Declines in fertilizer inputs to crop production are partially offset by flows of plant nutrients from feed imports. In formulating agri-environmental policies targeting nutrient loading, more attention should be paid to national imports-export balances and, especially, to the spatial distribution of flows in feed trade. |
Monopsonists, Disruptive Innovation and Food Security: The Case of High-Value CommodityJEL codes (2020) 🗎🗎 | Private firms in monopsony undertake disruptive innovation like contract farming (CF), where the firm invests in the food supply chain, provides credit, assumes the risk, and implements management strategies. This study investigates the impact of monopsonist involvement in CF and its impact on food security indicators among smallholders. Findings reveal that the monopsonist CF structure for ginger processing in Nepal increases the market price by about 18%, yields by 10%, and profits by 66%. However, the impact varies with farm size. Small farms (<= 0.51 hectares (ha)) engaged in CF have higher yields (18%), earn higher profits (81%), and receive higher market prices (12%) than small noncontract ginger producers. Contrary to popular belief, disruptive innovation in value chains by monopsonists could lead to higher yields, the market price received, and profitability for both small and large farmers. |
The impact of alternative policies on livestock farmers' willingness to recycle manure: evidence from central China (2020) 🗎🗎 | Purpose This article examines the impact of different policy instruments on livestock farmers' willingness to recycle manure. The results shed light on the optimal policy combination. Design/methodology/approach A game theoretical framework is constructed to illustrate farmers' optimal strategies under different policies. Theoretical results are empirically tested by survey data from beef cattle farmers in Central China. Findings Empirical results show that penalties work better than subsidies if each type of policy is implemented separately. The authors also find a positive interaction between subsidy and penalty policies, suggesting that a combination of subsidy and penalty policies produces the best outcome in incentivizing livestock farmers to recycle manure. Furthermore, planting and breeding simultaneously have the strongest effect on increasing livestock farmers' willingness to recycle manure, suggesting that the combination of planting and breeding can be an optimal strategy for manure management. Originality/value This study is based on firsthand survey data and provides new evidence on the effectiveness of alternative environmental policies on manure recycling. |
Evaluating sectoral effects of agricultural nitrogen pollution reduction policy in Croatia within a CGE framework (2020) 🗎🗎 | Environmental policies are becoming an important part of agricultural policy portfolio in the EU, which is binding on Croatia. This paper seeks to evaluate potential sectoral effects of several nitrogen pollution reduction policy measures within CGE model for Croatia. Finding appropriate agri-environmental policy design represents a typical optimization problem. Thus, the paper attempts to find potential agri-environmental measures which comply with supranational directives without jeopardizing other economic policy goals. Results show that polluter-pays principle-based measures, if not accompanied by the provider-gets principle measures, could have relatively large negative economy-wide effects in Croatia. However, these effects can be reduced by the appropriate policy mix. |
Best Management Practices and Nutrient Reduction: An Integrated Economic-Hydrologic Model of the Western Lake Erie Basin (2020) 🗎🗎 | We develop the first spatially integrated economic-hydrologic model of the western Lake Erie basin explicitly linking economic models of farmers' field-level best management practice (BMP) adoption choices with the Soil and Water Assessment Tool to evaluate nutrient management policy cost-effectiveness. We quantify trade-offs among phosphorus reduction policies and find that a hybrid policy coupling a fertilizer tax with cost-share payments for subsurface placement is the most cost-effective and can achieve the policy goal of 40% reduction in nutrient loadings. We also find economic adoption models alone can overstate the potential for BMPs to reduce nutrient loadings by ignoring biophysical complexities. |
Adoption of Environment-Friendly Agricultural Practices with Background Risk: Experimental Evidence (2020) 🗎🗎 | Agriculture is one of the economic sectors most exposed to exogenous risks such as climate hazards and price volatility on agricultural markets. Agricultural policies targeting the adoption of environment-friendly but potentially risk-increasing practices cannot ignore this challenge. Farmers have indeed to decide if they take the foreground risk associated with the adoption of environment-friendly practices, while simultaneously facing exogenous background risk beyond their control. Using a theoretical model and a public good experiment, we analyse the adoption of agri-environmental practices and the effect of agri-environmental subsidies in a context where risks are both foreground and background. While most of the literature on background risk focuses on its impact on individual decisions, we analyse the influence of background risk in a context of strategic uncertainty (contribution to a public good). The results highlight the potential synergies between greening the CAP and supporting risk management. We find that background risk discourages the adoption of green practices, although it affects all farmland independently from the farmer's choice of practices (environment friendly or conventional). An incentive payment per hectare of land farmed with green practices increases the adoption of risk-increasing practices but is significantly less effective in the presence of background risk. |
Nitrogen Tax and Set-Aside as Greenhouse Gas Abatement Policies Under Global Change Scenarios: A Case Study for Germany (2020) 🗎🗎 | The ambitious climate policy objectives of the COP21 agreement require the design and the implementation of effective and efficient policy instruments. The effectiveness and efficiency of agricultural abatement options depend on regional climate and natural conditions, changes in the global economy, global agricultural markets and regional agricultural production. Thus, the assessment of abatement options requires consideration of the global scale, the market scale and the regional producer scale. We investigate two abatement options discussed controversially in literature. Both have been partially applied to reduce environmental pollution from agriculture: a tax on nitrogen and the obligatory set-aside of agricultural land. Our study provides an assessment of the ecological effectiveness and the economic efficiency of both abatement options under different global scenarios. In our policy analysis we combine three applied policy simulation models to develop an integrated economic model framework. This model framework considers the global, the national and the regional scale and consists of the global general equilibrium model DART-BIO, the partial-equilibrium model CAPRI and the regional supply model RAUMIS. In the different global scenarios, the results show that both abatement options create relatively high marginal abatement costs and that the maximally reached abated greenhouse gas emissions represent only 15% of the quantity required to fulfill the policy targets. Compared to the obligatory set-aside option, the nitrogen tax is in both scenarios the more efficient policy. With respect to impacts on production and environment, a nitrogen tax is less forecastable than the obligatory set-aside option. Our study illustrates the relevance of considering global economic and market change in the assessment of producer-targeting environmental policies. |
Climate change mitigation and agriculture: measures, costs and policies - A literature review (2020) 🗎🗎 | We review the literature on climate change mitigation in agriculture with a focus on the use of climate policy instruments to incentivize the adoption of greenhouse gas mitigation measures. We develop an economic model characterizing the production decisions in animal and crop production farms and link our discussion on policy instruments to them. We review mitigation measures and their cost-effectiveness in reducing emissions. Given the multiple sources of agricultural emissions, the literature finds carbon taxes and emissions trading to perform best. The challenges involved in measuring and verifying changes in emissions make the implementation of policies targeting all sources of emissions difficult. Second-best policies addressing a subset of emissions, such as those from ruminants or mineral fertilizers, are more feasible but less efficient. Carbon sequestration in arable soils, while technically promising, faces the problems of heterogeneity in sequestration capacity, measurement, verification and permanence of sequestration. The variation of estimates on emissions reduction, abatement costs and differences in model simulations is large. A better basis for policy designs is needed. |
Disadoption of conservation practices: cases of injecting manure and soil testing (2020) 🗎🗎 | Promoting the continuous use of conservation practices by farmers is an important environmental policy issue to minimize the impact of agriculture on environmental quality. The effectiveness of environmental policies relies on farmers' continuous use of conservation practices. Using duration analysis, this study analyzes the disadoption of injecting manure into soil and soil testing. The results show that over time farmers can become more likely to disadopt conservation practices due to changing economic conditions and learning-by-doing. Therefore, programs and policies that focus on one-time adoption can be limited in promoting the continuous use of conservation practices. |
Forest regeneration on European sheep pasture is an economically viable climate change mitigation strategy (2020) 🗎🗎 | Livestock production uses 37% of land globally and is responsible for 15% of anthropogenic greenhouse gas (GHG) emissions. Yet livestock farmers across Europe receive billions of dollars in annual subsidies to support their livelihoods. This study evaluates whether diverting European subsidies into the restoration of trees on abandoned farmland represents a cost-effective negative-emissions strategy for mitigating climate change. Focusing on sheep farming in the United Kingdom, and on natural regeneration and planted native forests, we show that, without subsidies, sheep farming is not profitable when farmers are paid for their labour. Despite the much lower productivity of upland farms, upland and lowland farms are financially comparable per hectare. Conversion to 'carbon forests' is possible via natural regeneration when close to existing trees, which are seed sources. This strategy is financially viable without subsidies, meeting the net present value of poorly performing sheep farming at a competitive $4/tCO(2)eq. If tree planting is required to establish forests, then similar to$55/tCO(2)eq is needed to break-even, making it uneconomical under current carbon market prices without financial aid to cover establishment costs. However, this break-even price is lower than the theoretical social value of carbon ($68/tCO(2)eq), which represents the economic cost of CO(2)emissions to society. The viability of land-use conversion without subsidies therefore depends on low farm performance, strong likelihood of natural regeneration, and high carbon-market price, plus overcoming potential trade-offs between the cultural and social values placed on pastoral livestock systems and climate change mitigation. The morality of subsidising farming practices that cause high GHG emissions in Europe, whilst spending billions annually on protecting forest carbon in less developed nations to slow climate change is questionable. |
How Green Public Procurement can drive conversion of farmland: An empirical analysis of an organic food policy (2020) 🗎🗎 | This paper studies a Green Public Procurement (GPP) policy decided by the Swedish government in 2006, stating objectives related to organic farming. The policy aims to increase the public sector's organic food purchases, in order to incentivise Swedish farmers to convert to organic practices, thereby contributing to national environmental quality objectives. We analyse the effect of organic food procurement on organic agricultural land, using panel data from 2003 to 2016 including information on municipalities' organic food purchases, land use, and direct subsidies aimed at organic production. Based on different specifications and mainly FGLS estimations, we conclude that the 2006 organic food policy is associated with a significant positive impact on organic agricultural land. A significant effect of direct agricultural policy in the form of subsidies is also found. |
Developing improved methods for identifying the cost-efficient abatement set in coastal water quality protection (2020) 🗎🗎 | Eutrophication of coastal waters is a recognised problem in estuaries around the globe. To analyse cross-boundary water quality management, such as protection of the Baltic Sea, economic nutrient abatement models commonly operate on a large scale, grouping river systems to large catchment areas. Theoretical deliberation suggests that modelling abatement in such a way removes the opportunity of targeting measures to the most vulnerable regions within the catchment, while overestimating the capacity of abatement measures in the upstream areas. However, the implications on designing environmental policy depend on catchment characteristics and the stringency of the abatement targets. In this study a model of the catchment area is built with zones that are an increasing distance away from the coast to show what kind of bias in the optimal abatement set is caused by the assumption of spatial homogeneity. By solving the model with and without the zones for good ecological status at the South-West coast of Sweden, it is shown that while assuming homogeneity prevents from perceiving the abatement measures where they would be the most effective, it also leads to ignoring spatial limitations that are more relevant to a subset of abatement measures, such as the wetlands and buffer zones. Following from the relatively large nitrogen abatement targets, the overall effect of assuming catchment homogeneity is to underestimate the abatement costs and to overestimate the potential of wetlands to reduce nitrogen. |
Analysis of the effect of alternative agri-environmental policy instruments on production performance and nitrogen surplus of representative dairy farms (2020) 🗎🗎 | Nitrogen (N) surplus is an important environmental problem on the island of Ireland (Northern Ireland and the Republic of Ireland), and the dairy sector has been identified as contributing more to this problem compared to other agricultural sectors. As a result, there has been increased demand for efficient policy measures to improve the economic and environmental performance of dairy farms in the region. In this study, we employed the positive mathematical programming (PMP) optimization modelling framework to simulate the economic and environmental impact of two alternative agri-environmental policy instruments on different dairy farm types. Specifically, the study considers the effects of an N surplus tax and an agri-environmental nutrient application standard on the production performance and N surplus of representative dairy farms using scenario analyses. The results of the analyses showed that the effects of the agri-environmental policy instruments vary across the two countries and clusters of dairy farms, resulting in clear differential effects on farm structure and N surpluses. The study concluded that in situations where the nutrient surplus is already high, as with the large farms clusters in this study, the use of manure application standards will be more effective in limiting nutrient surplus to soils compared to the use of nutrient surplus tax. |
Greenhouse Gas Emissions in Norwegian Agriculture: The Regional and Structural Dimension (2020) 🗎🗎 | This paper studies the hypothesis that farm structure and the regional distribution of agricultural activity themselves have a significant impact on greenhouse gas (GHG) emissions from agriculture. Applying a dynamic model for the Norwegian agricultural sector covering the entire farm population, the model results support the hypothesis. Even without mitigation options, GHG emissions decline by 1.4 per cent if agriculture becomes regionally concentrated and increase by 1.5 per cent if a policy that favors a small-scale farm structure is put in place. Adding a carbon tax to a policy that leads to regional concentration, may help to reconcile competing policy objectives. A switch from animal production to crop production, and an extensification of animal production keeps a large resource base across the country while cutting GHG emissions. |
Greening and legume-supported crop rotations: An impacts assessment on Italian arable farms (2020) 🗎🗎 | Since the 1990s, the European Union has progressively and structurally reformed the Common Agricultural Policy with a gradual integration of environmental objectives. For the period post-2020, one of the most relevant changes could be the upgrading of the crops diversification, imposing it as an obligation to rotate crops by introducing legumes in the cropping patterns. This paper proposes an assessment of the possible effects of such obligation on the arable crops sector in Italy. The analysis uses a mathematical programming model calibrated and validated by way positive approach and is conducted on data of about 2800 Italian farms of the Farm Accountancy Data Network. Moreover, the analysis is structured by geographical area and altimetric level in order to consider typical specificities of Italian farms according to their localization. Our results show the legume-supported crop rotations reduce the general environmental pressure of agricultural activities and affect a large part of the arable land, against reduced economic impacts. In the majority of farms the lost income per hectare is lower than the national average value of the decoupled payments. Yet, the legume-supported crop rotations determine a reduction in the production of main crops and, especially in some areas, negative economic and social impacts. All this suggests that the legume-supported crop rotations are an opportunity to adopting sustainable agricultural practices and that Member States could implement the agronomic practice differently for areas and use additional instruments to meet the EU's objectives. Especially the decoupled and coupled payments are needed to limit economic losses and incentivize farmers towards virtuous behaviour. |
Assessing the productivity consequences of agri-environmental practices when adoption is endogenous (2020) 🗎🗎 | We address the general problem of selection bias, an issue endemic to policy analysis when adoption is voluntary, with an empirical application to environmental policies for agriculture. Many voluntary practices for mitigating the environmental impacts of agriculture provide external benefits while lowering productivity. Policy analysis of the productivity consequences is complicated by the fact that decision makers can choose their own policy levers, an action that ruins any notion of random assignment. We introduce an identification strategy to correct this kind of endogeneity, combining classic methods from stochastic frontier analysis and selection models. Applying it to micro-level data from Finnish grain farms, we find that more efficient producers are more likely to enroll in subsidized practices. And, because those practices tend to reduce yield, frontier analysis without the endogeneity correction greatly understates the productivity loss. In other words, naively basing the frontier estimator on the subset of less-productive farms leads to downward bias in the frontier estimates. In fact, average inefficiency more than doubles after the correction in this case. An outlier investigation suggests that the lowest decile of farms are responsible for most of the selection bias in the uncorrected model. |
Decentralisation of agri-environmental policy design (2020) 🗎🗎 | We theoretically examine the gains of the decentralisation of agri-environmental policy design. We consider a model with homogeneous regions and joint production of local and global public goods from agriculture. Assuming that governments are characterised by different agency costs and knowledge of the PG values, we evaluate whether decentralisation is a suitable strategy to improve the efficiency of agri-environmental payments. We find that partial decentralisation always improves the welfare. We apply our theoretical model to the case of abandoned wetlands in Brittany. We find that national governments are the most suitable to design agri-environmental policies. Our results contribute to reflections on future Common Agricultural Policy. |
Investigating Monetary Incentives for Environmentally Friendly Residential Landscapes (2020) 🗎🗎 | State and local governments develop policies that promote environmentally friendly landscaping practices with the goal to mitigate adverse environmental impacts from heavily maintained residential lawns. One of the mechanisms to achieve low-input landscaping practices in the urban environment is to promote the conversion of monoculture turfgrass lawns into partial turfgrass, low-input landscapes. Rebate incentives are used as an instrument to encourage the adoption of such landscapes. This study investigates the effects of households' monetary incentive requirement on households' preferences and willingness to pay for low-input landscapes. The discrete choice experiment method was used to analyze responses from households categorized into low, medium, and high incentive requirement groups. The results show that rebate incentives may have significant positive effects on individuals' intentions to adopt low-input landscapes. Participants with low incentive requirement were willing to pay more for environmentally friendly attributes, compared with their counterparts in the medium and high incentive requirement groups. Practical implications for relevant stakeholders are discussed. |
Effects of redistributing policy support on farmers' technical efficiency (2020) 🗎🗎 | The objective of this article is twofold: first, investigating the relationship between technical efficiency and decoupled direct payments of a sample of Italian farms prior to the application of the 2014-2020 Common Agricultural Policy reform; second, evaluating possible implications of alternative scenarios about distribution of direct payments on technical efficiency. To these aims, a stochastic frontier analysis is adopted. Results indicate that direct payments produce significant effects on technical efficiency in specialized farms, which received higher levels of support. However, effects are contrasting. Moreover, results show that redistribution of policy subsidies may negatively impact on technical efficiency to an extent depending upon the criterion of redistribution applied. Finally, some policy suggestions are given. |
Management of legacy nutrient stores through nitrogen and phosphorus fertilization, catch crops, and gypsum treatment (2020) 🗎🗎 | We develop a modeling framework, based on discrete-time dynamic optimization, to study the effect of legacy nutrient stores and soil nutrient dynamics on optimal nutrient management and agri-environmental policy in crop production. Three alternative measures are studied to reduce nutrient loss: reduced fertilization, nonlegume catch crop cultivation and gypsum amendment. According to our results, landowner can bring down excessively high phosphorus stocks causing environmental damage within decades, by simultaneous optimization of the nitrogen and phosphorus fertilizers on the economic basis of profit maximization. Our results suggest that nitrogen loss abatement with catch crops is socially optimal, whereas the use of gypsum is well justified as a temporary measure on soils with high soil phosphorus levels. A dynamic tax-subsidy-scheme, which takes into account the current soil nutrient levels and field attributes such as soil texture, can enforce the socially optimal outcome. The welfare losses of the static steady-state-based tax-subsidy-schemes are increasing functions of the legacy nutrient stores and soil's ability to hold nutrients. Recommendations for Resource Managers We develop a modeling framework to study the effect of the legacy nutrient stores and the soil nutrient dynamics on the optimal nutrient management and agri-environmental policy in crop production. Nonlegume catch crop cultivation is a socially optimal long-term measure for nitrogen loss abatement, whereas phosphorus loss abatement with gypsum is socially optimal on soils with high soil phosphorus levels. A dynamic tax-subsidy-scheme, which is adjusted annually according to the soil nutrient stocks, leads to social optimum. Although this can be difficult to implement in practice, it can be useful in the derivation of the simpler, static tax-subsidy-schemes. If a gypsum subsidy is paid for those years, where the soil P level is above the threshold level for the gypsum application, the welfare loss of the static steady-state-based tax-subsidy-schemes is almost zero. Simultaneous adjustment of the N and P fertilizer rates enables the use of simple, static and soil-texture-ignorant tax-subsidy schemes, without a notable social welfare loss |
Measuring regional diversification of environmental externalities in agriculture and the effectiveness of their reduction by EU agri-environmental programs in Poland (2020) 🗎🗎 | The problem of externalities is an important aspect of contemporary discussion about the directions of agricultural development and agricultural policy. Nonetheless measuring agri-environmental externalities is a difficult task and rarely undertaken in scientific research. In our research, we have constructed a synthetic indicator that allows measuring agri-environmental externalities at the regional level, taking into account both positive and negative effects at the same time. We also studied the extent to which our synthetic indicator can be used to inform about the effectiveness of subsidies paid to farmers in the European Union under agri-environmental programs, in reduction of externalities generated by agriculture. We concluded that the use of subsidies under agri-environmental programs has a positive impact on reducing externalities generated by agricultural production, measured by our indicator. (C) 2020 Elsevier Ltd. All rights reserved. |
Estimating the effects of agri-environmental measures using difference-in-difference coarsened exact matching (2020) 🗎🗎 | This paper studies the effect of agri-environmental measures (AEMs) in improving greener farming practices. We focus on the quantification of the effectiveness of AEMs implemented in the Rural Development Programme of the Lombardy Region, during the 2007-2013 programming period. Our work attempts to address the well-known potential failures of these kinds of policy instruments such as adverse selection effects by relying on an innovative matching procedure, the coarsened exact matching (CEM). This methodology presents a number of interesting properties that are worth considering in policy-evaluation analyses. Our empirical analysis focuses on three AEM schemes protecting and enhancing the environment, Crops diversification, Grassland maintenance and Organic farming. Overall, our results suggest that AEMs were apparently effective in improving the farms' environmental performances. However, our preliminary cost-benefit analysis highlights that the costs of implementing this policy, when compared to the additional results obtained, tend to be quite large. |
The link between production efficiency and opportunity cost of protecting environment in TR83 region, Turkey (2020) 🗎🗎 | Many nations have tended to transform their traditional growth paradigm to green growth policy paradigm to ensure environmentally sustainable development. Governments, therefore, have developed and implemented environmental protection programs to ensure environmentally sustainable development. For accelerating the transformation to green production techniques and technologies, the study aims (i) to calculate the opportunity cost of protecting environment, (ii) to estimate the production efficiency of farms, and (iii) to determine the impact of opportunity cost of protecting environment on the production efficiency in TR83 region in Turkey. Farm-level research data have been collected from totally 361 farms (334 farms participated in the environmental protection programs (EFALP) and 27 conventional farms) by using a well-structured questionnaire during the production year of 2016-2017. Minimization of total absolute deviation (MOTAD) programming model as a linearized version of QP was used to elicit the farm plans under both condition of protecting environmental and conventional farming condition. When estimating the technical, allocative, and economic efficiencies, the net farm revenue under prevailing conditions, potential net farm revenue, and optimum farm revenue were used. The net revenue difference between EFALP farm and conventional farm was attributed to the opportunity cost of protecting the environment. The impact of the opportunity cost of protecting the environment on production efficiency was explored by using two-limit Tobit model. Research results show that the opportunity cost of environmental protection is 3060 TRY per hectare and varied spatially in the research area. Government environmental support has not compensated the farmers' revenue sacrifice completely. The technical efficiency scores of EFALP farms and conventional farms are 0.77 and 0.75, while that of allocative efficiency are 0.83 and 0.86, respectively. The economic efficiency scores of the EFALP farms and conventional farms are 0.62 and 0.63, respectively. Research results further indicate that the opportunity cost of protecting the environment can be said to have a negative impact on the economic efficiency. The variables of labor and farmland have been negatively affected the economic efficiency, while the effects of operating capital, age of operators, and family size seem positive. The study suggests creating regulatory framework providing opportunity to adjust government environmental support spatially based on the farm-level opportunity cost of protecting environment. Government practices should be developed by policymakers to supervise and control the farms participated in the environmental protection programs. Eliminating the conventional decision-making approach and replacing with environmental trade-off analysis-based decision-making techniques, involving stakeholders during the designing environmental policy, and sharing outputs of environmental trade-off analysis may increase the success of the environmental policy and programs. In addition, bringing away the goal mismatch of scientist and users by establishing bridge in between knowledge and action may increase the effectiveness of environmental protection programs. |
Public preferences for post 2020 agri-environmental policy in the Czech Republic: A choice experiment approach (2020) 🗎🗎 | In November 2017 European Union commission presented a communication report summarizing the reform proposal of the post 2020 Common Agriculture Policy (CAP). The reform aims to address the environmental degradation associated with agricultural production as well as change in the structure of CAP payments. To this end, the Ministry of Agriculture in Czech Republic is preparing to set its priorities towards CAP's reform. In this study we applied a choice experiment to investigate the public preferences for a set of environmental goods and services delivered by agri-environment-climatic voluntary measures (AECMs). A mixed logit model is employed to elicit preferences and explore their heterogeneity. We find that respondents oppose strongly funding removal. Among environmental attributes, water and food quality are the ones with the highest implicit marginal willingness-to-pay values. Preferences for no funding option are heterogeneous with socio-demographic and attitudinal variables explaining some sources of this heterogeneity. A continuation of national funding for the AECMs is expected to lead to a better state of environment with an anticipated positive welfare change of 669-932 mil EUR as opposed to funding removal. The change reflects the estimated welfare change resulting from moving from a low to a medium or to a high preservation state of agri-environmental attributes. We also project the budget change for AECMs considering the level of national funding and given the transfer share between Pillar I and II. Based on our results, we suggest that national funding can be informed by the welfare change scenarios and transfer shares are projected accordingly. |
Understanding farmers' reluctance to reduce pesticide use: A choice experiment (2020) 🗎🗎 | Despite reducing the use of pesticides being a major challenge in developed countries, dedicated agri-environmental policies have not yet proven successful in doing so. We analyze conventional farmers' willingness to reduce their use of synthetic pesticides. To do so, we conduct a discrete choice experiment that includes the risk of large production losses due to pests. Our results indicate that this risk strongly limits farmers' willingness to change their practices, regardless of the consequences on average profit. Furthermore, the administrative burden has a significant effect on farmers' decisions. Reducing the negative health and environmental impacts of pesticides is a significant motivator only when respondents believe that pesticides affect the environment. Farmers who earn revenue from outside their farms and/or believe that yields can be maintained while reducing the use of pesticides are significantly more willing to adopt low-pesticide practices. Policy recommendations are derived from our results. |
Smallholder farms' adaptation to the impacts of climate change: Evidence from China's Loess Plateau (2020) 🗎🗎 | The impacts of climate change on agriculture in developing countries will depend on the extent to which agricultural production in those regions adapts to climate change's influences. This study uses a whole-farm land use optimisation approach to explore climate change impacts, when including adaptation, on farm profitability, production and associated greenhouse gas (GHG) emissions in the Loess Plateau of northern China. The results show that with adaptation activities, the losses in smallholder farm profitability caused by the climate change could be moderate. Declining rainfall results in land use changes that generate higher on-farm GHG emissions with the most economically beneficial adaptations. With 5 % or 10 % decline in annual rainfall, the introduction of agricultural carbon tax would generate substantial reduction in on-farm GHG emissions. With 30 % rainfall reduction, agricultural carbon tax is not likely to bring about considerable emission reduction. The economically optimised land uses are generally sensitive to potential changes. When rainfall reductions appear, there is a clear trend toward reducing cropping area and transiting to pasture. With 5-10% rainfall reductions, increasing agricultural carbon tax with same rainfall reduction leads to the expansion in cropping enterprises. However, with 30 % rainfall reduction, land allocations are not sensitive to agricultural carbon tax. When with declining annual rainfall, in the optimal enterprises more oats-pasture rotations are employed to reduce wheat dominated rotations. Besides land use patterns, adaptations through altering farm management practices are also necessary. The economically optimised sheep flock would be increased considerably with declining rainfall. Overall, policymakers are suggested to initial more educational schemes to tell smallholder farmers how to make the best use of available adaptation strategies and consider changes in climate when design and implement agricultural policy. |
Fiscal incentives for pesticides as an anti-health and anti-environmental policy (2020) 🗎🗎 | Pesticides are hazardous products, and fiscal incentives for such products directly and indirectly impact public resources for health in Brazil, since these incentives encourage pesticide use. The article thus aimed to estimate the tax relief for pesticides in Brazil in 2017. The methodology included a literature search on related tax legislation, followed by estimates based on pesticide expenditures according to the latest national Agricultural Census and foreign trade data. Tax exemptions on pesticides in 2017 totaled BRL 9.8 billion (USD 3.0 billion), of which: exemptions of BRL 6.2 billion (USD 1.9 billion) on value-added tax on sales and services, BRL 1.7 billion (USD 515 million) on excise tax, BRL 1.5 billion (USD 455 million) on social tax on net corporate income, and BRL 472 million (USD 143 million) on import tax. The results show that the efficiency of pesticide use is artificially overestimated by failing to take tax exemptions into account. Thus, taxation is a potential means for reducing the demand for pesticides, mitigating negative externalities and strengthening alternative and ecologically balanced agricultural practices. |
Evaluating alternative policies to reduce pesticide groundwater pollution in Dutch arable farming (2020) 🗎🗎 | This article develops a dynamic optimal control modelof farmers' production decisions and applies it to panel data from Dutch arable farms to assess the effectiveness of different policy interventions in reducing pesticide groundwater pollution. Three different policy measures are examined in turn: namely, a flat tax on pesticides; a groundwater contamination tax; and a quantity restriction on pesticide use. The examined policies are compared against both quantitative and qualitative criteria drawn from the pesticide policy literature. Results show that the groundwater contamination tax is the most preferred policy for reducing pesticide groundwater pollution. A way to apply such a tax is proposed and discussed. |
Environmental policies that shape productivity: Evidence from cattle ranching in the Amazon (2021) 🗎🗎 | We examine two potential economic benefits of environmental policy, increased agricultural investment and productivity. This is important because if these benefits are realized, environmental policy could optimize land use for food production while minimizing the negative environmental impacts. We employ multiple empirical techniques to analyze a market-led and a public-led anti-deforestation policy that influence the vast cattle ranching sector in the Brazilian Amazon. We show that both policies increased cattle productivity, while the market-led policy also increased investment. We find no evidence that the two policies were substitutes or complements. Results indicate that the policies were each effective in different market- and land-use-contexts, so that enforcement of both policies increased productivity for a larger set of properties. Our research reveals both indirect and unintended benefits of environmental regulation, which have implications for the design of policies that affect the agricultural sector, a major driver of land-use change. |
Stability of farm income: The role of agricultural diversity and agri-environment scheme payments (2021) 🗎🗎 | Instability (or variability) in farm income represents a significant challenge for farm management and the design of public policies. Identifying farming practices which can increase the stability of farm income may help farms to cope with shocks such as extreme weather events and economic challenges. Farming practices associated with increasing agricultural diversity and agri-environment schemes are considered to improve ecological functions and landscape resilience, however, their effect on the stability of farm income is not well known. Using a multilevel model, we analyse the effect of a range of farming practices and subsidies on the stability of farm income, and their relative importance, using four different measures of stability. We examine data for 2333 farms in England and Wales, from 2007 to 2015, and use separate multilevel models for a range of different farm types to provide targeted recommendations for farmers. Here we show that greater agricultural diversity (i.e. lower degree of specialisation in different crop and livestock activities) increases the stability of farm income, in dairy, general cropping, cereal and mixed farms. Agricultural diversity is a particularly important factor for general cropping farms; increasing the degree of specialisation by one standard deviation (we use standardised coefficients), increases the variability of income by approximately 20%. Dairy, general cropping and mixed farms that receive more agri-environment payments also have more stable incomes, reducing variability by between 4 and 8%. In contrast, an increase in direct subsidies paid to farmers based on the area farmed is associated with a relatively large decrease in the stability of farm income, ranging from 6 to 35% across most farm types. Reducing the intensity of inputs is found to be an important factor increasing the stability of income for all farm types; on average reducing the intensity of inputs reduces variability of income by 20%. Practices associated with increasing agricultural diversity and agri-environment schemes have previously been found to lead to a better provision of ecosystem services and resilience to abiotic stresses, reducing the need for expensive chemical inputs. Engagement in environmentally sustainable farming practices including agri-environment schemes, increasing agricultural diversity, and reducing the intensity of inputs, may increase the stability of many farm businesses whilst at the same time reducing negative impacts of farming on the environment. |
Agricultural subsidies and global greenhouse gas emissions (2021) 🗎🗎 | Agricultural sectors receive US$600 billion per year in government support, providing incentives for GHG emission-intensive production. Here, the authors show that removing this support will not reduce global GHG emissions by much; rather it will need to be radically redirected to contribute to climate change mitigation. Agricultural production is strongly affected by and a major contributor to climate change. Agriculture and land-use change account for a quarter of total global emissions of greenhouse gases (GHG). Agriculture receives around US$600 billion per year worldwide in government support. No rigorous quantification of the impact of this support on GHG emissions has been available. This article helps fill the void. Here, we find that, while over the years the government support has incentivized the development of high-emission farming systems, at present, the support only has a small impact in terms of inducing additional global GHG emissions from agricultural production; partly because support is not systematically biased towards high-emission products, and partly because support generated by trade protection reduces demand for some high-emission products by raising their consumer prices. Substantially reducing GHG emissions from agriculture while safeguarding food security requires a more comprehensive revamping of existing support to agriculture and food consumption. |
How Capital Endowment and Ecological Cognition Affect Environment-Friendly Technology Adoption: A Case of Apple Farmers of Shandong Province, China (2021) 🗎🗎 | Ever-increasing global environmental issues, land degradation, and groundwater contamination may significantly impact the agricultural sector of any country. The situation worsens while the global agricultural sectors are going through the unsustainable intensification of agricultural production powered by chemical fertilizers and pesticides. This trend leads the sector to exercise environmentally friendly technology (EFT). Capital endowment and ecological cognition may significantly impact fostering farmers' adoption of environmentally friendly technology. The government also tends to change the existing policies to cope with ever-increasing challenges like pollution control, maintaining ecological balance, and supporting agricultural sectors substantially by employing ecological compensation policy. The study's main objective is to explore the impacts of farmer's ecological compensation, capital endowment, and ecological cognition for the adoption of EFT. The empirical setup of the study quantifies with survey data of 471 apple farmers from nine counties of Shandong province. The study used Heckman's two-stage model to craft the findings. The results showed that 52.02% of fruit farmers adopted two environmentally friendly technologies, and 23.99% of fruit farmers adopted three forms of environmentally friendly technologies. At the same time, we have traced that the capital endowment, planting scale, family income, and technical specialization of fruit farmers significantly impact adopting EFT. The study also revealed that understanding ecological compensation policy has a significant positive effect on adopting environmentally friendly technology. Seemingly, ecological compensation policy has a specific regulatory effect on fruit farmers' capital endowment and ecological cognition. Therefore, it is necessary to extend the demonstration facilities, training, and frequently arrange awareness-building campaigns regarding rural non-point source pollution hazards and improve the cognition level of farmers. The agriculture extension department should strengthen the agricultural value chain facilities to make farmers fully realize the importance of EFT. Government should promote and extend the supports for availing new and innovative EFT at a reasonable price. Moreover, cooperative, financial, and credit organizations need to lead for the smooth transition of EFT. The agricultural cooperatives and formal risk-taking networks should act responsibly for shaping the behavioral factors of farmers. |
Taxing interacting externalities of ocean acidification, global warming, and eutrophication (2021) 🗎🗎 | We model a stylized economy dependent on agriculture and fisheries to study optimal environmental policy in the face of interacting external effects of ocean acidification, global warming, and eutrophication. This allows us to capture some of the latest insights from research on ocean acidification. Using a static two-sector general equilibrium model we derive optimal rules for national taxes on CO 2 emissions and agricultural run-off and show how they depend on both isolated and interacting damage effects. In addition, we derive a second-best rule for a tax on agricultural run-off of fertilizers for the realistic case that effective internalization of CO 2 externalities is lacking. The results contribute to a better understanding of the social costs of ocean acidification in coastal economies when there is interaction with other environmental stressors. Recommendations for Resource Managers: Marginal environmental damages from CO 2 emissions should be internalized by a tax on CO 2 emissions that is high enough to not only reflect marginal damages from temperature increases, but also marginal damages from ocean acidification and the interaction of both with regional sources of acidification like nutrient run-off from agriculture. In the absence of serious national policies that fully internalize externalities, a sufficiently high tax on regional nutrient run-off of fertilizers used in agricultural production can limit not only marginal environmental damages from nutrient run-off but also account for unregulated carbon emissions. Putting such regional policies in place that consider multiple important drivers of environmental change will be of particular importance for developing coastal economies that are likely to suffer the most from ocean acidification. |
A hybrid model for carbon price forecasting using GARCH and long short-term memory network (2021) 🗎🗎 | The reform of the EU ETS markets in 2017 has induced new carbon price forecasting challenges. This study proposes a novel decomposition-ensemble paradigm VMD-GARCH/LSTM-LSTM model to better adapt to the current fast-rising and volatile carbon price. Three significant steps are involved: (1) the Variational Mode Decomposition (VMD) algorithm decomposes the carbon price series into sub-modes; (2) The Long Short-Term Memory (LSTM) network predicts low-frequency sub-modes, with the GARCH model predicting high frequency sub-modes; (3) the forecasts from sub-modes are ensembled through the LSTM non-linear ensemble method. Combining econometric and artificial intelligence methods, our proposed model has an excellent performance on the current carbon price, with smaller errors than single econometrics or AI models or decomposition-ensemble models with linear simple superposition approaches. VMD have significant advantages over their alternative algorithms. Moreover, the LSTM involved in our model is well suited to forecast the rising carbon price in late EU ETS Phase III, providing good insight into risk aversion for participants. |
Carbon sequestration in French agricultural soils: A spatial economic evaluation (2021) 🗎🗎 | Soil organic carbon sequestration measures entail costs to farmers with different individual characteristics and located in different areas. A cost-effective analysis taking into account these heterogeneities is crucial for developing effective public policy aimed at increasing carbon sequestration. We undertake such an analysis focusing on three soil organic carbon sequestration measures: no-till, extension of temporary grasslands, and hedgerows. Through an optimization model applied to France, our results show that only extension of temporary grasslands can store carbon at low cost, though their potential for carbon sequestration is also low. For an ambitious carbon sequestration target, no-till and hedgerows are needed. Because of heterogeneities among farmers, we show that economic incentives are more cost effective than command and control measures. Furthermore, we highlight that the carbon sequestration policy tested here is unable to totally neutralize agricultural greenhouse gas emissions and that a combination of agricultural and environmental policies is essential for tackling climate change. |
Estimating the CAP greening effect by machine learning techniques: A big data ex post analysis (2021) 🗎🗎 | Greening payment represents one of the main and controversial novelties of the current Common Agricultural Policy (CAP) 2015-2020 programming period. Such payments bind a portion of farm subsidies to compliance with specified practices, such as crop diversification. Unlike previous ex ante simulations, the present contribution attempts to estimate the ex post impact of greening payments in terms of land use change using a parcel level constant sample (2011-2017) dataset of approximately 4.5 million observations. First, Markov chains and a weighted chi(2) test detect a discontinuity in farmland transition probabilities only in farms that are initially noncompliant with the greening rules. Such a discontinuity is not observed in farms that are not eligible for or already compliant with the greening rules. This evidence, even if indirect, suggests that the greening payment has induced farmland conversion in farms with a lower degree of crop diversification. The greening impact on farmland allocation in this farm group was subsequently simulated using machine learning techniques. This policy has reduced maize monoculture and increased nitrogen-fixing crops, fallow land and other cereals in the targeted farms. Environmental gains (reduction in greenhouse gas -GHG-and input use) and farm economic losses due to land use change have been derived, providing the first tentative cost-benefit analysis of such policy tool. Due to data limitations, indirect costs and benefits of greening (improvement in pest management, land quality and biodiversity) have not been assessed. More research and detailed environmental monitoring data are required to assess such indirect effects and to provide a more comprehensive cost-benefit ex post analysis of greening policy |
Bilevel optimization of conservation practices for agricultural production (2021) 🗎🗎 | Uncertainty surrounding the sources of nonpoint pollution and producer response to prospective policy incentives complicates the nonpoint policy problem. To explain, neither policy-makers nor producers know the exact effect of current and alternative farming practices on the contributions of specific cropped fields to nutrient pollution. Spatial heterogeneity of the production technology and environmental damage of runoff also precludes the formulation of an analytic solution, so that producer response to prospective policies is unknown a priori to the policy maker. To address the complexity arising from point source uncertainty and spatial heterogeneity, we draw on recent computational advances to reformulate the classic nonpoint source pollution problem as a multi-objective bilevel optimization problem, employing genetic algorithm (GA) solution methods. This computational framework explicitly accounts for the nested nature of farm-level management decisions in response to prospective agri-environmental policy incentives, and spatial heterogeneity of both production and pollution effects. Our application considers the optimal spatial targeting of multiple management practices in the Iowa Raccoon River Watershed, an intensive corn and soybean production region of the Upper Mississippi River Basin (UMRB). Consistent with theory and previous empirical results, we find that combining multiple management practices, versus relying on single or one-size policies, lowers the total cost for a given level of nitrogen reduction. But we also find overall limited potential nitrogen reduction via implementing these practices on working land, suggesting the continued need for land retirement in meeting current nonpoint policy goals for the UMRB. We believe that the main contribution of this study lies in the novelty of the bilevel approach, which explicitly accounts for feedbacks between policy makers and agricultural producers, while the associated GA computational methods allow for better handling of large scale and complex spatial heterogeneity over the agricultural watershed. ? 2021 Elsevier Ltd. All rights reserved. |
Farmers ' heterogeneous preferences towards results-based environmental policies (2021) 🗎🗎 | Heterogeneity of farmers' preferences and willingness to accept compensation (WTA) related to a results-based agri-environmental policy were investigated using a choice experiment and latent class analysis. A quarter of farmers would be willing to switch to a results-based agri-environmental scheme (AES) with a moderate compensation request, whereas one quarter supported the status quo. Willingness to reform the AES was found among all farmers, but the current practice-based approach generally appeared to be more acceptable than the new proposed policy. Responses to the results-based AES differed between farmer groups. Therefore, attention should be paid in policy design to ensuring desirable programme coverage among different regions and farm types. |
Dynamic game in agriculture and industry cross-sectoral water pollution governance in developing countries (2021) 🗎🗎 | Agriculture in developing countries is a vulnerable sector and is subsidized. Environmental restrictions on agriculture sector are minimal. The excessive use of chemical fertilizers and pesticides has caused serious non point source water pollution. Although previous studies have focused on agricultural water pollution, the cooperation between agricultural and industrial sectors in water pollution mitigation has not been thoroughly discussed. In this context, this paper introduces a cross-sectoral water pollution dynamic model. We studied the feedback (subgame perfect) equilibrium of the non-cooperative game between two sectors. To discern the impact of environmental policy, we compared the equilibrium solutions of two scenarios that differ in terms of environmental policy for agricultural sector mitigation. The results show that when agricultural and industrial sectors work together to mitigate water pollution, the accumulated common pollutants level decreases; when sectors consider mitigation measures in their objectives, they tend to emit more pollutants; the damage produced by both sectors is lower when both sectors participate in mitigation. Our policy recommendation is that crosssectoral water pollution control is essential and developing countries should include both agricultural and industrial sectors in environmental governance to maximize the coordination of cross-sectoral environmental policies. |
Do differential payments for agri-environment schemes affect the environmental benefits? A case study in the North-Eastern Italy (2021) 🗎🗎 | Promoting sustainable agricultural systems, maintaining biodiversity, and establishing measures to counteract climate change are the clear objectives of the future Common Agricultural Policy (CAP); however, there is still uncertainty regarding its implementation. At the level of the European Union, the justification for the CAP appears increasingly linked to the translation of policy objectives into results-based measures. Accordingly, in this paper, we estimate a composite indicator to track changes at the farm level and assess the impacts of agrienvironment climate schemes (AECSs) on the change in management intensity. As AECS payments are tailored to compensate for the costs and income forgone due to participation in environmentally friendly measures, we assume that any environmental benefits increase with the amount of payment received. We estimate the effects of differential payments on management intensity by applying a generalised propensity score approach to a case study comprising all AECSs implemented in the Veneto region (North-eastern Italy). We find that AECSs have a significant effect on the composite indicator of extensification, but the provision of environmental good differs among the varying levels of payments. Our results contribute in-depth reflections and a proposal for measuring the cost-effectiveness of AECSs to the ongoing debate on the post-2020 CAP regarding AECSs. |
An Updated Economic Analysis of the Global Polio Eradication Initiative (2021) 🗎🗎 | Despite a strong global commitment, polio eradication efforts continue now more than 30 years after the 1988 World Health Assembly resolution that established the Global Polio Eradication Initiative (GPEI), and 20 years after the original target of the year 2000. Prior health economic analyses estimated incremental net benefits of the GPEI of 40-50 billion in 2008 U.S. dollars (US$2008, equivalent to 48-59 billion US$2019), assuming the achievement of polio eradication by 2012. Given the delays in achieving polio eradication and increased costs, we performed an updated economic analysis of the GPEI using an updated integrated global model, and considering the GPEI trajectory as of the beginning of 2020. Applying similar methods and assuming eradication achievement in 2023, we estimate incremental net benefits of the GPEI of 28 billion US$2019, which falls below the prior estimate. Delays in achieving polio eradication combined with the widescale introduction of relatively expensive inactivated poliovirus vaccine significantly increased the costs of the GPEI and make it less cost-effective, although the GPEI continues to yield expected incremental net benefits at the global level when considered over the time horizon of 1988-2029. The overall health and financial benefits of the GPEI will depend on whether and when the GPEI can achieve its goals, when eradication occurs, the valuation method applied, and the path dependence of the actions taken. Reduced expected incremental net benefits of the GPEI and the substantial economic impacts of the COVID-19 pandemic pose large financial risks for the GPEI. |
Innovative fire policy in the Amazon: A statistical Hicks-Kaldor analysis (2022) 🗎🗎 | Developing countries have been recently addressing the respiratory health impact of agricultural burnings with innovative environmental policy. In Acre state, Brazilian Amazon, mechanization is subsidized, enabling smallholders to comply with a cap on burned area. To appraise amendments in the policy, a statistical HicksKaldor test was developed and applied to stakeholders' stated choice surveys coupled with an econometric estimate of fire's effect on health. The test unveiled the trade-off between urban dwellers' health and smallholders' production. It also avoided the large disparity of groups in size and in goods valued to result into instability of efficiency assessment across six alternative group weighting schemes. The amendments that increased joint welfare required a great expansion of mechanization supply. Such change, which is not presently feasible at state level, could be piloted at municipal level by relying on the private sector and smallholders' organizations, and also on subsidized credit and power tillers. |