Agri-environmental Policy Design Research Articles

Targeting best agricultural practices to enhance ecosystem services in European mountains

Agri-environmental policies in Europe are failing to sufficiently address ongoing environmental degradation, biodiversity decline, climate impacts, and societal demands for sustainability. To reverse this, policymakers, practitioners, and farmers need better guidance on which specific agricultural practice/s should be promoted and how to adapt current practices to reach the desired objectives. Here we use social valuation tools to elucidate the relationship between agricultural practices and the provision of key ecosystem services in mountains, including maintenance of scenery from agricultural landscapes, conservation of biodiversity, regulation of climate change through carbon sequestration, production of local quality products, maintenance of soil fertility, and prevention of forest wildfires. We use as case studies two contrasting but representative mountain agroecosystems in the Mediterranean and Nordic regions of Europe. We analyze the best agricultural practices in both agroecosystems to reach the targeted environmental outcomes under three plausible policy scenarios. We find significant differences in the average contribution of agricultural practices to ecosystem services provision, which suggest the need for regionalizing the research efforts and, consequently, the design of agri-environmental policies. However, we also identify practices for ecosystem service delivery across policy scenarios and agroecosystems. Among these, grazing and silviculture practices such as extending the grazing period, grazing in semi-natural habitats, grazing in remote and abandoned areas, adapting stocking rate to the carrying capacity, and moving flocks seasonally, stand out for their relevance in all policy scenarios. These results highlight the potential of adequate grazing and silviculture practices to deliver bundles of ecosystem services. Our study provides guidance to design agri-environmental policies in Europe that focus on rewarding farmers for their sustainable management of natural resources, climate change mitigation and adaption and biodiversity conservation.

Evaluating sectoral effects of agricultural nitrogen pollution reduction policy in Croatia within a CGE framework

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.

Decentralisation of agri-environmental policy design

Abstract 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.

Estimating stocks and flows of nitrogen: Application of dynamic nutrient balance to European agriculture

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 over time, 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.

Farming system modelling for agri-environmental policy design: The case of a spatially non-aggregated allocation of conservation measures

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.

Managing increasing environmental risks through agrobiodiversity and agrienvironmental policies

AbstractAgrobiodiversity 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.

Agri-Environmental Program Compliance in a Heterogeneous Landscape

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.

Integrated pest management portfolios in UK arable farming: results of a farmer survey

Farmers are faced with a wide range of pest management (PM) options that can be adopted in isolation or alongside complementary or substitute strategies. This paper presents the results of a survey of UK cereal producers, focusing on the character and diversity of PM strategies currently used by, or available to, farmers. In addition, the survey asked various questions pertaining to agricultural policy participation, attitude towards environmental issues, sources of PM advice and information and the important characteristics of PM technologies. The results indicate that many farmers do make use of a suite of PM techniques, and that their choice of integrated PM (IPM) portfolio appears to be jointly dictated by farm characteristics and government policy. Results also indicate that portfolio choice does affect the number of subsequent insecticide applications per crop. These results help to identify the type of IPM portfolios considered to be adoptable by farmers and highlight the importance of substitution in IPM portfolios. As such, these results will help to direct R&D effort towards the realisation of more sustainable PM approaches and aid the identification of potential portfolio adopters. These findings highlight the opportunity that a revised agri-environmental policy design could generate in terms of enhancing coherent IPM portfolio adoption.

Managing Increasing Environmental Risks Through Agro-Biodiversity and Agri-Environmental Policies

Agro-biodiversity 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 such as e.g. CO2 storage. We analyze the choice of agro-biodiversity by risk-averse farmers who have access to financial insurance, and study the implications for agri-environmental policy design when on-farm agro-biodiversity generates a positive risk externality. While increasing environmental risk leads private farmers to increase their level of on-farm agro-biodiversity, the level of agro-biodiversity in the laissez-faire equilibrium remains inefficiently low. We show how either one of two agri-environmental policy instruments can cure this risk-related market failure: an ex-ante Pigouvian subsidy on on-farm agro-biodiversity 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 agro-ecosystem is characterized by a high natural insurance function, low costs and large external benefits of agro-biodiversity.

Evaluation of Agri-Environmental Measures in the Venice Lagoon Watershed. Expert Knowledge Elicitation and Multi-Criteria Analysis

Various tools and approaches have been experimented worldwide to address the externalities arising from agricultural activities, among which the design of agri-environmental policies and the introduction of specific measures to cope with the environmental impacts of agricultural origin. The mechanisms adopted within the Common Agricultural Policy with such aim fall within the category of Agri-Environmental Schemes (AESs), which are market-based policy schemes aimed at providing farmers with the right incentives to adopt farming practices yielding positive environmental externalities and are based on voluntary participation. Given the intrinsic complexity of agro-ecosystems and the effects of farmers’ behaviour, the assessment of the effectiveness and cost-effectiveness of AESs is always challenging, and often both the environmental and economic effectiveness of AESs are questionable. The main objective of this paper is to present a framework for assessing the effectiveness of AESs in promoting social and environmental sustainability in Europe, based on experts’ knowledge. Experts’ knowledge, acquired through adequate elicitation strategies and managed with robust and transparent methodologies, can help building a system of information that can then be used to infer the effectiveness of agri-environmental measures, at least in comparative terms, if not in terms of quantitative absolute estimations. In the present study, the NetSyMoD framework approach has been adopted. First, a short introduction of the policy evaluation framework, the role of monitoring and performance indicators and of experts’ opinion is provided. Subsequently the methodology used to identify experts and to elicit their assessment on the effectiveness of AES schemes is presented. Finally, the paper provides a concrete example in which experts’ opinions have been used for the assessment exercise, and presents a framework for collecting, managing and integrating different opinions in a coherent framework and with quantitative indicators.

Development and Implementation of Agri-Environmental Policy: English Experience and Lessons for Australia

In this article we consider what Australia can learn from English experience with regard to the design, implementation and evaluation of Agri-Environmental Policy (AEP). First, we examine the emergence of the need for farmers to meet Good Farming Practice standards to receive AEP payments. This concept closely relates to the duty of care' idea in Australia. Second, we explain how contracts have been used to implement AEP identifying important issues in design. Finally, we consider the importance of benefit and costs estimates of AEP implementation in determining policy developments. We conclude with a summary of results for AEP design and implementation in Australia.

Agricultural multifunctionality in the WTO—legitimate non-trade concern or disguised protectionism?

The extent to which the multifunctionality of agriculture can justify continuing domestic subsidies to farmers that may be trade distorting in their effects, has emerged as a key bone of contention in the current World Trade Organization (WTO) agriculture trade talks. Supporters of multifunctionality point to the contribution of agriculture in terms of food security, rural development and environmental protection. In this paper, we focus on the environmental component in order to examine three interconnected questions. First, how robust is multifunctionality as a policy concept? Second, if multifunctionality is a reality, how valid is the claim made by European negotiators that the liberalization of agricultural policy and the abolition of blue box subsidies threaten the joint production of food and environmental goods in rural space? Third, what are the precise implications of this analysis for agri-environmental policy design, and the likely compatibility of the European Union's favoured model with current and future WTO disciplines? We conclude that, while multifunctionality is a genuine, and in some respects, unique, feature of European agriculture, it is in relation to the perceived threat of extensive agricultural restructuring to biodiversity and landscape values in the European Union that the concept has been most fully realized. This has profound implications for policy design, suggesting a need to retain some element of income support in the policy mix in order to defend environmental assets against the extreme consequences of farm structural change. We conclude by exploring what these deductions might mean for the future course of the WTO talks and for the long-term design of agri-environmental policy in industrialized countries.

Compliance Monitoring and Agri‐Environmental Policy

This paper examines the issue of compliance monitoring in agri‐environmental policy when a farmer is risk‐neutral and risk‐averse. The optimal contract model presented here significantly extends and generalises the results and conclusions of Choe and Fraser (1998). In this paper the environmental agency explicitly chooses monitoring accuracy and monitoring costs as well as rewards for farmers. It is found that, by modelling the environmental agency as being cost‐conscious optimal monitoring accuracy may or may not be higher for a risk‐averse farmer than for a risk‐neutral farmer. Essentially, the environmental agency faces an explicit trade‐off between monitoring costs and incentive payments as a means to ensure the desired behaviour from the farmer. The importance of the results derived are discussed in the context of agri‐environmental policy design and implementation