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Opportunity costs of providing crop diversity in organic and conventional farming: would targeted environmental policies make economic sense?

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  • Timo Sipiläinen
  • Anni Huhtala

Abstract

Targeted environmental policies for farmlands may improve the cost efficiency of conservation programmes if one can identify those farms that produce public goods with the least cost. We derive shadow values of producing crop diversity for a sample of Finnish conventional and organic crop farms in the period 1994–2002 in order to examine their opportunity costs of conservation. Our results of Data Envelopment Analysis show that there is variation in the shadow values between farms and between the technologies adopted. The degree of cost heterogeneity and farms' potential for specialisation in producing environmental outputs determine whether voluntary programmes such as auctions for conservation payments are economically reasonable. , Oxford University Press.

Suggested Citation

  • Timo Sipiläinen & Anni Huhtala, 2013. "Opportunity costs of providing crop diversity in organic and conventional farming: would targeted environmental policies make economic sense?," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 40(3), pages 441-462, July.
    • Handle: RePEc:oup:erevae:v:40:y:2013:i:3:p:441-462
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    File URL: http://hdl.handle.net/10.1093/erae/jbs029
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    Cited by:

    1. Karunarathna, Muditha & Wilson, Clevo, 2017. "Agricultural biodiversity and farm level technical efficiency: An empirical investigation," Journal of Forest Economics, Elsevier, vol. 29(PA), pages 38-46.
    2. Sueyoshi, Toshiyuki & Yuan, Yan & Goto, Mika, 2017. "A literature study for DEA applied to energy and environment," Energy Economics, Elsevier, vol. 62(C), pages 104-124.
    3. Claudia Seidel & Thomas Heckelei & Sebastian Lakner, 2019. "Conventionalization of Organic Farms in Germany: An Empirical Investigation Based on a Composite Indicator Approach," Sustainability, MDPI, vol. 11(10), pages 1-16, May.
    4. Maietta, Ornella Wanda & De Devitiis, Biagia & Destefanis, Sergio & Suppa, Domenico, 2019. "Human capital and rural development policy: evidence from European FADN regions," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 8(3).
    5. Silvio Franco & Barbara Pancino & Angelo Martella & Tommaso De Gregorio, 2022. "Assessing the Presence of a Monoculture: From Definition to Quantification," Agriculture, MDPI, vol. 12(9), pages 1-10, September.
    6. Bostian, Moriah B. & Herlihy, Alan T., 2014. "Valuing tradeoffs between agricultural production and wetland condition in the U.S. Mid-Atlantic region," Ecological Economics, Elsevier, vol. 105(C), pages 284-291.
    7. Sebastian Lakner & Stefan Kirchweger & Daniel Hoop & Bernhard Brümmer & Jochen Kantelhardt, 2018. "The Effects of Diversification Activities on the Technical Efficiency of Organic Farms in Switzerland, Austria, and Southern Germany," Sustainability, MDPI, vol. 10(4), pages 1-18, April.
    8. Areal, Francisco J. & Jones, Philip J. & Mortimer, Simon R. & Wilson, Paul, 2018. "Measuring sustainable intensification: Combining composite indicators and efficiency analysis to account for positive externalities in cereal production," Land Use Policy, Elsevier, vol. 75(C), pages 314-326.
    9. Biagia De Devitiis & Ornella Wanda Maietta, 2015. "Shadow Prices of Human Capital in Agriculture. Evidence from European FADN Regions," CSEF Working Papers 415, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    10. Ang, Frederic & Mortimer, Simon & Areal, Francisco & Tiffin, Richard, 2015. "The Impact of Dynamic Profit Maximization on Biodiversity: A Network DEA Application to UK Cereal Farms," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205857, Agricultural and Applied Economics Association.
    11. Yasuo Ohe, 2017. "Assessing Managerial Efficiency of Educational Tourism in Agriculture: Case of Dairy Farms in Japan," Sustainability, MDPI, vol. 9(11), pages 1-15, October.
    12. Zdeňka Žáková Kroupová & Lukáš Čechura & Matěj Opatrný & Zuzana Hloušková & Iveta Mlezivová, 2023. "Assessment of the impact of agricultural support on crop diversity," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 69(3), pages 89-100.
    13. Dupré, Marie & Blazy, Jean-Marc & Michels, Thierry & Le Gal, Pierre-Yves, 2021. "Supporting policymakers in designing agricultural policy instruments: A participatory approach with a regional bioeconomic model in La Réunion (France)," Land Use Policy, Elsevier, vol. 100(C).
    14. Seifert, Stefan & Wolff, Saskia & Hüttel, Silke, 2024. "Eco-efficiency in the agricultural landscape of North Rhine-Westphalia, Germany," Agricultural Systems, Elsevier, vol. 220(C).
    15. Amer Ait Sidhoum & Philipp Mennig & Johannes Sauer, 2023. "Do agri-environment measures help improve environmental and economic efficiency? Evidence from Bavarian dairy farmers," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 50(3), pages 918-953.
    16. Lakner, Sebastian & Breustedt, Gunnar, 2015. "Efficiency analysis of organic farming systems- a review of methods, topics, results, and conclusions," 2015 Conference, August 9-14, 2015, Milan, Italy 212025, International Association of Agricultural Economists.
    17. Sergei Schaub & Jaboury Ghazoul & Robert Huber & Wei Zhang & Adelaide Sander & Charles Rees & Simanti Banerjee & Robert Finger, 2023. "The role of behavioural factors and opportunity costs in farmers' participation in voluntary agri‐environmental schemes: A systematic review," Journal of Agricultural Economics, Wiley Blackwell, vol. 74(3), pages 617-660, September.

    More about this item

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land

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