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Counterfactual Approach for Assessing Agri-environmental Policy: The Case of the Finnish Water Protection Policy

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  • Lankoski, Jussi E.
  • Ollikainen, Markku

Abstract

This paper applies counterfactual approach to assess the impacts of agri-environmental programs. We focus on ex-post policy evaluation in a case where the control group is de facto non-existent and treatment group covers the whole population. We employ a theoretical framework based on profit maximization and the interlinkages between the behavior of agents and the response of environmental systems to the economic decisions. Optimization in the absence of policies produces the control case, while optimization under the policies fits to the treatment case. We apply our model to assess the performance of the Finnish Agri-Environmental Programme to reduce agricultural nutrient runoff to the Baltic Sea. We demonstrate that the Finnish Agri-Environmental Programme does not achieve its goals, because it fails to anticipate farmers’ responses to incentives created by the Common Agricultural Policy and the Agri-Environmental Programme itself. The social cost-benefit analysis of the Programme shows negative net benefits.

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Bibliographic Info

Paper provided by European Association of Agricultural Economists in its series 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland with number 114404.

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Date of creation: 2011
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Handle: RePEc:ags:eaae11:114404

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Keywords: Agricultural and Food Policy; Resource /Energy Economics and Policy;

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  1. Ing-Marie Gren, 2001. "International Versus National Actions Against Nitrogen Pollution of the Baltic Sea," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 20(1), pages 41-59, September.
  2. Sami Myyrä & Elise Ketoja & Markku Yli-Halla & Kyöisti Pietola, 2005. "Land Improvements under Land Tenure Insecurity: The Case of pH and Phosphate in Finland," Land Economics, University of Wisconsin Press, vol. 81(4).
  3. Jussi Lankoski & Markku Ollikainen & Pekka Uusitalo, 2006. "No-till technology: benefits to farmers and the environment? Theoretical analysis and application to Finnish agriculture," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 33(2), pages 193-221, June.
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Cited by:
  1. Qiuzhen Chen & Timo Sipiläinen & John Sumelius, 2014. "Assessment of Agri-Environmental Externalities at Regional Levels in Finland," Sustainability, MDPI, Open Access Journal, vol. 6(6), pages 3171-3191, May.

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