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Direct Payments for Environmental Services from Mountain Agriculture in Japan: Evaluating its Effectiveness and Drawing Lessons for Developing Countries

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  • Sakuyama, Takumi

Abstract

This article evaluates the effectiveness of ex-post targeting of the direct payment program for mountain agriculture in Japan. A regression analysis explaining the entry into the program shows that the farm profitability and the production cost were significant positive and negative factor, respectively, in determining the uptake, while the efforts by local governments were a robust factor in facilitating the enrollment. These findings imply ineffective ex-post targeting and call for the differentiation of the premium, alternative incentives to promote forestation for the un-enrolled fields and additional funds targeted to those prefectures with the low uptake ratio. Lessons drawn from the Japanese experience for effective incentive measures in developing countries include the use of composite indicators in designating eligible areas to avoid the risk of insufficient targeting and the engagement of local governments to facilitate the entry through the reduction of transaction costs among participants.

Suggested Citation

  • Sakuyama, Takumi, 2006. "Direct Payments for Environmental Services from Mountain Agriculture in Japan: Evaluating its Effectiveness and Drawing Lessons for Developing Countries," eJADE: electronic Journal of Agricultural and Development Economics, Food and Agriculture Organization, Agricultural and Development Economics Division, vol. 3(1).
  • Handle: RePEc:ags:ejadef:110128
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    File URL: http://purl.umn.edu/110128
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    References listed on IDEAS

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    3. JunJie Wu, 2000. "Slippage Effects of the Conservation Reserve Program," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(4), pages 979-992.
    4. Arild Vatn, 2002. "Multifunctional agriculture: some consequences for international trade regimes," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 29(3), pages 309-327, July.
    5. Pagiola, Stefano & Arcenas, Agustin & Platais, Gunars, 2005. "Can Payments for Environmental Services Help Reduce Poverty? An Exploration of the Issues and the Evidence to Date from Latin America," World Development, Elsevier, vol. 33(2), pages 237-253, February.
    6. Oscar J. Cacho & Graham R. Marshall & Mary Milne, 2003. "Smallholder Agroforestry Projects: Potential for carbon sequestration and poverty alleviation," Working Papers 03-06, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA).
    7. Katherine Falconer & Pierre Dupraz & Martin Whitby, 2001. "An Investigation of Policy Administrative Costs Using Panel Data for the English Environmentally Sensitive Areas," Journal of Agricultural Economics, Wiley Blackwell, vol. 52(1), pages 83-103.
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