Thilo W. Glebe () (Environmental Economics and Agricultural Policy Group, Technical University of Munich) Uwe Latacz-Lohmann () (Department of Agricultural Economics, Christian-Albrechts University, Kiel)
Abstract
The paper develops a conceptual framework for the welfare analysis of agri-environmental policy within an international trade context. Based on a two-factor production model, we analyse the marginal social costs of agricultural production before and after the introduction of an efficient agri-environmental policy. The paper shows that an assessment of social external costs, which is predicated on the factor intensity prior to the implementation of an agri-environmental policy, underestimates the potential welfare improvements that can be achieved by introducing an efficient environmental policy. We further demonstrate that, even if the marginal environmental effect of farming is negative prior to introducing agri-environmental policy, the co-existence of positive and negative externalities might cause the production level to increase as a result of an optimal environmental policy.
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Publisher Info
Paper provided by Technische Universität München, Environmental Economics and Agricultural Policy Group in its series Discussion Papers with number
012006.
Length: 15 pages Date of creation: Jan 2006 Date of revision:
2008 Publication status: Published in Yearbook of Socioeconomics in Agriculture (in work; title: Assessing the production and welfare effects of agri-environmental policy: a conceptual analysis.) Handle: RePEc:tuu:papers:012006
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