Agri-environment schemes and sustainable farmland management: a farm level assessment of the economic costs and benefits.

Abstract

Abstract This chapter explores farm-level economic considerations that have an important bearing on the financial incentive for farmers to participate in agri-environment schemes. It does this by examining the evidence from three case study farms in the UK, all of which were all-lowland farms with a mix of arable and grazing livestock enterprises (sheep and/or beef cattle) and were participants in both the Countryside Stewardship Scheme (CSS) and the Wildlife Enhancement Scheme (WES). The case study assessment offers some conclusions and some important implications for the use of income foregone-based agri-environment payments as an instrument of policy. While the evidence is based on only three farms it is clear from this evidence that even within broadly similar farm type categories substantial farm-level variation in costs and income foregone exists. Furthermore it proves that this variation in the cost-benefit from agri-environment scheme participation can be observed for the same prescription, under the same agri-environment scheme, at the same rate of payment but on different farms. In general there was a net financial benefit on all three farms (based on the budgeting basis chosen). Participation in agri-environment schemes thus increased farm income despite the fact that the payment rates were set with little or no allowance for any profit or 'incentive' element. Taking account of the decoupling of direct payments from production had a dramatic impact on the extent to which the case study farms might be expected to benefit from participation in agri-environment schemes. The greatest beneficiaries were those farms that had received the largest amounts of subsidy under the old support regimes.