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Are Green Payments Good for the Environment?

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  • Lichtenberg, Erik

Abstract

There is growing interest in green payments subsidizing conservation measures on working farmland based on the premise that they have positive effects on the environment and agriculture simultaneously without causing international trade distortions. This paper uses a Ricardian land market equilibrium model to examine the impacts of green payments. The analysis shows green payments can worsen ambient pollution damage by subsidizing the expansion of more intensive crop cultivation. Some forms of green can increase cultivation intensity (and thus environmental damage) as well. These adverse effects can be avoided by careful targeting, but such targeting is likely to be quite difficult.

Suggested Citation

  • Lichtenberg, Erik, 2004. "Are Green Payments Good for the Environment?," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 33(1), April.
  • Handle: RePEc:ags:arerjl:31371
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    File URL: http://purl.umn.edu/31371
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    References listed on IDEAS

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    1. Guilherme S. Bastos & Erik Lichtenberg, 2001. "Priorities in Cost Sharing for Soil and Water Conservation: A Revealed Preference Study," Land Economics, University of Wisconsin Press, vol. 77(4), pages 533-547.
    2. Katherine Reichelderfer & William G. Boggess, 1988. "Government Decision Making and Program Performance: The Case of the Conservation Reserve Program," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 70(1), pages 1-11.
    3. Peter Feather & Daniel Hellerstein, 1997. "Calibrating Benefit Function Transfer to Assess the Conservation Reserve Program," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(1), pages 151-162.
    4. Olmstead, Alan L. & Rhode, Paul W., 2002. "The Red Queen and the Hard Reds: Productivity Growth in American Wheat, 1800–1940," The Journal of Economic History, Cambridge University Press, vol. 62(04), pages 929-966, December.
    5. Lichtenberg, Erik & Smith-Ramirez, Ricardo, 2003. "Cost Sharing, Transaction Costs, And Conservation," 2003 Annual meeting, July 27-30, Montreal, Canada 22141, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. Babcock, Bruce A. & Lakshminarayan, P. G. & Wu, J. & Zilberman, David, 1997. "Targeting Tools for the Purchase of Environmental Amenities," Staff General Research Papers Archive 5220, Iowa State University, Department of Economics.
    7. Wu, JunJie & Babcock, Bruce A., 1995. "Optimal Design Of A Voluntary Green Payment Program Under Asymmetric Information," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 20(02), December.
    8. John B. Braden & Gary V. Johnson & Aziz Bouzaher & David Miltz, 1989. "Optimal Spatial Management of Agricultural Pollution," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(2), pages 404-413.
    9. Marc O. Ribaudo, 1989. "Targeting the Conservation Reserve Program to Maximize Water Quality Benefits," Land Economics, University of Wisconsin Press, vol. 65(4), pages 320-332.
    10. V. Eldon Ball & Jean-Christophe Bureau & Richard Nehring & Agapi Somwaru, 1997. "Agricultural Productivity Revisited," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(4), pages 1045-1063.
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    Cited by:

    1. Jussi Lankoski & Erik Lichtenberg & Markku Ollikainen, 2010. "Agri-Environmental Program Compliance in a Heterogeneous Landscape," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 47(1), pages 1-22, September.
    2. Lankoski, Jussi E. & Lichtenberg, Erik & Ollikainen, Markku, 2008. "Agri-environmental program compliance under heterogeneous conditions," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44381, European Association of Agricultural Economists.
    3. Fleming, Patrick & Lichtenberg, Erik & Newburn, David A., 2015. "Agricultural Cost Sharing and Conservation Practices for Nutrient Reduction in the Chesapeake Bay Watershed," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205762, Agricultural and Applied Economics Association;Western Agricultural Economics Association.
    4. Alix-Garcia, Jennifer M. & Shapiro, Elizabeth N. & Sims, Katharine R. E., 2010. "Forest Conservation and Slippage: Evidence from Mexico's National Payments for Ecosystem Services Program," Staff Paper Series 548, University of Wisconsin, Agricultural and Applied Economics.
    5. Fleming, Patrick, 2014. "A Model of Agricultural Land Use, Costs, and Water Quality in the Chesapeake Bay," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170373, Agricultural and Applied Economics Association.
    6. Jennifer M. Alix-Garcia & Elizabeth N. Shapiro & Katharine R. E. Sims, 2012. "Forest Conservation and Slippage: Evidence from Mexico’s National Payments for Ecosystem Services Program," Land Economics, University of Wisconsin Press, vol. 88(4), pages 613-638.
    7. Ricardo Smith, 2006. "Measuring the Effects of Working-Land Conservation Programs on Adoption of Soil-Erosion Reducing Practices and Permanent Vegetative Cover," Working papers DTE 369, CIDE, División de Economía.

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    Keywords

    Environmental Economics and Policy;

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