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Stricter cross-compliance standards in Switzerland: Economic and environmental impacts at farm- and sector-level

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  • Schmidt, Alena
  • Mack, Gabriele
  • Möhring, Anke
  • Mann, Stefan
  • El Benni, Nadja

Abstract

A Swiss popular initiative reflecting large public concerns about the negative environmental impacts of agricultural production launched a proposal to rigorously tighten environmental cross-compliance standards. The so-called drinking water initiative (DWI) proposes restricting direct payments to farms that (1) preserve biodiversity, (2) do not use any pesticides, (3) adapt their livestock to their on-farm feed capacity and (4) do not use antibiotics regularly or prophylactically. Based on the recursive-dynamic, agent-based agricultural sector model SWISSland, we assessed, ex-ante, the impacts of the initiative on environmental and economic indicators at the farm- and sector-level. Stakeholders from both groups, supporters and opponents of the initiative, were involved in the assessment. We found that the incorporation of far more stringent environmental standards into the cross-compliance system caused a larger number of farms to opt-out: For 33–63% of the pork and poultry farms and 51–93% of the vegetable/orchards/winery farms, it was more profitable to forego direct payments. However, the majority of the ruminant farms (87%) were expected to comply with the standards. Although the non-complying farm types were associated with the most severe environmental impacts, we found that the initiative nonetheless had positive effects on water quality at the sectoral level in Switzerland: e.g., the share of pesticide-free arable land increased to 70–92%, those of the permanent cropland to 11–52%, and the nitrogen surplus decreased. However, the total agricultural production measured in calories decreased (12–21%), and therefore agricultural imports would increase. If the current direct payment budget goes completely to the complying farms, and if these farms receive a price premium, then we predict an average farm income increase of 2–34% for the complying farms; otherwise, a decrease of 6–22% will be found depending on the scenario. A sensitivity analysis showed that price uncertainties had the highest impact on farm income.

Suggested Citation

  • Schmidt, Alena & Mack, Gabriele & Möhring, Anke & Mann, Stefan & El Benni, Nadja, 2019. "Stricter cross-compliance standards in Switzerland: Economic and environmental impacts at farm- and sector-level," Agricultural Systems, Elsevier, vol. 176(C).
    • Handle: RePEc:eee:agisys:v:176:y:2019:i:c:s0308521x19302446
    DOI: 10.1016/j.agsy.2019.102664
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    References listed on IDEAS

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    1. Alena Schmidt & Magdalena Necpalova & Albert Zimmermann & Stefan Mann & Johan Six & Gabriele Mack, 2017. "Direct and Indirect Economic Incentives to Mitigate Nitrogen Surpluses: A Sensitivity Analysis," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 20(4), pages 1-7.
    2. Finger, Robert & El Benni, Nadja, 2011. "Farmers’ Adoption of Extensive Wheat Production - Determinants and Implications," 122nd Seminar, February 17-18, 2011, Ancona, Italy 98979, European Association of Agricultural Economists.
    3. Albert Zimmermann & Anke Möhring & Gabriele Mack & Ali Ferjani & Stefan Mann, 2015. "Pathways to Truth: Comparing Different Upscaling Options for an Agent-Based Sector Model," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 18(4), pages 1-11.
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    Cited by:

    1. Möhring, Niklas & Finger, Robert, 2022. "Pesticide-free but not organic: Adoption of a large-scale wheat production standard in Switzerland," Food Policy, Elsevier, vol. 106(C).
    2. Mack, G. & Finger, R. & Ammann, J. & El Benni, N., 2023. "Modelling policies towards pesticide-free agricultural production systems," Agricultural Systems, Elsevier, vol. 207(C).
    3. Jana Lososová & Radek Zdeněk, 2023. "Simulation of the impacts of the proposed direct payment scheme - The case of the Czech Republic," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 69(1), pages 13-24.
    4. Schmidt, Alena & Necpalova, Magdalena & Mack, Gabriele & Möhring, Anke & Six, Johan, 2021. "A food tax only minimally reduces the N surplus of Swiss agriculture," Agricultural Systems, Elsevier, vol. 194(C).

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