Advanced Search
MyIDEAS: Login

Evaluating greening farm policies: A structural model for assessing agri-environmental subsidies

Contents:

Author Info

  • Marita Laukkanen
  • Céline Nauges

Abstract

One quarter of the agricultural area in the European Union is registered in agrienvironmental programs. Despite the prevalence of such programs and increasing demands for environmental quality in the European Union, ex-post assessments of program benefits are rare. This study uses a structural econometric model to evaluate the impacts of agri-environmental payments provided through the Finnish Agri-Environmental Program, whose primary goal is to reduce nutrient pollution from agricultural land. Drawing on a representative sample of individual grain farms, the research quantifies the effects of agri-environmental payments on farmers? decisions on the use of agri-chemical inputs and on the allocation of land to grain production and set-aside (fallow) over the period 1996?2005. The effects of program payments are ascertained based on exogenous variation in payment rates across regions and over time. We find that the agri-environmental payments have reduced fertilizer inputs but that this impact has been modest. In terms of land allocation, the impact has been counterproductive in that the payments have slightly increased the grain area and reduced set-aside. To quantify the impact of agri-environmental payments on nutrient loading ? the environmental outcome of interest ? we then combine the predicted land allocation and fertilizer use with environmental production functions. Overall, we estimate that the payments have reduced the damage costs associated with nutrient pollution from grain farming by 11 to 12 percent.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.vatt.fi/file/vatt_publication_pdf/wp40.pdf
Download Restriction: no

File URL: http://www.vatt.fi/publications/latestPublications/publication/Publication_1345_id/927
Download Restriction: no

Bibliographic Info

Paper provided by Government Institute for Economic Research Finland (VATT) in its series Working Papers with number 40.

as in new window
Length:
Date of creation: 04 Nov 2012
Date of revision:
Handle: RePEc:fer:wpaper:40

Contact details of provider:
Postal: Arkadiankatu 7, P.O. Box 1279, FI-00101 Helsinki
Phone: +358 295 519 400
Fax: +358 295 519 599
Email:
Web page: http://www.vatt.fi/
More information through EDIRC

Order Information:
Email:

Related research

Keywords: agri-environmental programs; payments for ecosystem services; farm subsidies; structural models; panel data; policy evaluation; nutrient pollution; cost-benefit analysis;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Lubowski, Ruben & Plantinga, Andrew & Stavins, Robert, 2007. "What Drives Land Use Change in the United States? A National Analysis of Landowner Decisions," Working Paper Series rwp07-059, Harvard University, John F. Kennedy School of Government.
  2. Baylis, Katherine R. & Rausser, Gordon C., 2004. "Agri-Environmental Programs In The United States And The European Union," Working Papers 15848, University of British Columbia, Food and Resource Economics.
  3. Nigel Key & Ruben N. Lubowski & Michael J. Roberts, 2005. "Farm-Level Production Effects from Participation in Government Commodity Programs: Did the 1996 Federal Agricultural Improvement and Reform Act Make a Difference?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(5), pages 1211-1219.
  4. Koikkalainen, Kauko & Laukkanen, Marita & Helin, Janne, 2006. "Abatement costs for agricultural nitrogen and phosphorus loads: a case study of South-Western Finland," Discussion Papers 11867, MTT Agrifood Research Finland.
  5. Phoebe Koundouri & Marita Laukkanen & Sami Myyrä & Céline Nauges, 2009. "The effects of EU agricultural policy changes on farmers' risk attitudes," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 36(1), pages 53-77, March.
  6. Nick Hanley & David Oglethorpe, 1999. "Emerging Policies on Externalities from Agriculture: An Analysis for the European Union," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(5), pages 1222-1227.
  7. Kosenius, Anna-Kaisa, 2010. "Heterogeneous preferences for water quality attributes: The Case of eutrophication in the Gulf of Finland, the Baltic Sea," Ecological Economics, Elsevier, vol. 69(3), pages 528-538, January.
  8. Chabé-Ferret, Sylvain & Subervie, Julie, 2012. "How Much Green for the Buck? Estimating Additional and Windfall Effects of French Agro-Environmental Schemes by DID-Matching," LERNA Working Papers 12.23.380, LERNA, University of Toulouse.
  9. Wu, JunJie & Adams, Richard M. & Kling, Catherine L. & Tanaka, Katsuya, 2004. "From Microlevel Decisions to Landscape Changes: An Assessment of Agricultural Conservation Policies," Staff General Research Papers 12519, Iowa State University, Department of Economics.
  10. Keane, Michael P., 2010. "Structural vs. atheoretic approaches to econometrics," Journal of Econometrics, Elsevier, vol. 156(1), pages 3-20, May.
  11. James J. Heckman, 2010. "Building Bridges between Structural and Program Evaluation Approaches to Evaluating Policy," Journal of Economic Literature, American Economic Association, vol. 48(2), pages 356-98, June.
  12. J. Scott Shonkwiler & Steven T. Yen, 1999. "Two-Step Estimation of a Censored System of Equations," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(4), pages 972-982.
  13. Turtola, E. & Paajanen, A., 1995. "Influence of improved subsurface drainage on phosphorus losses and nitrogen leaching from a heavy clay soil," Agricultural Water Management, Elsevier, vol. 28(4), pages 295-310, December.
  14. 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.
  15. Marita Laukkanen & Céline Nauges, 2011. "Environmental and Production Cost Impacts of No-till in Finland: Estimates from Observed Behavior," Land Economics, University of Wisconsin Press, vol. 87(3), pages 508-527.
  16. Anne Lacroix & Alban Thomas, 2011. "Estimating the Environmental Impact of Land and Production Decisions with Multivariate Selection Rules and Panel Data," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 93(3), pages 780-798.
  17. Markowska, Agnieszka & Zylicz, Tomasz, 1999. "Costing an international public good: the case of the Baltic Sea," Ecological Economics, Elsevier, vol. 30(2), pages 301-316, August.
  18. Andrea Pufahl & Christoph R. Weiss, 2009. "Evaluating the effects of farm programmes: results from propensity score matching," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 36(1), pages 79-101, March.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:fer:wpaper:40. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Anita Niskanen).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.