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Multifunctional Agriculture and the Preservation of Environmental Benefits

  • Werner Hediger
  • Bernard Lehmann
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    We investigate environmental aspects of agriculture from a welfare economic perspective and show that both positive and negative effects exhibit the character of undepletable externalities. To internalise these externalities while taking equity concerns into account, we propose compensation of farmers and forest managers according to the marginal external benefit of their land and a combination of charges and subsidies to improve rural water quality. This is consistent with efficiency requirements, would not cause additional market distortions, and leave the property rights on the land with the farmers while assigning the right on clean air and water to the consumers.

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    File URL: http://www.sjes.ch/papers/2007-IV-4.pdf
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    Article provided by Swiss Society of Economics and Statistics (SSES) in its journal Swiss Journal of Economics and Statistics.

    Volume (Year): 143 (2007)
    Issue (Month): IV (December)
    Pages: 449-470

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    Handle: RePEc:ses:arsjes:2007-iv-4
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    1. Cabe, Richard & Herriges, Joseph A., 1992. "The regulation of non-point-source pollution under imperfect and asymmetric information," Journal of Environmental Economics and Management, Elsevier, vol. 22(2), pages 134-146, March.
    2. Alan Randall, 2002. "Valuing the outputs of multifunctional agriculture," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 29(3), pages 289-307, July.
    3. Marc O. Ribaudo & C. Tim Osborn & Kazim Konyar, 1994. "Land Retirement as a Tool for Reducing Agricultural Nonpoint Source Pollution," Land Economics, University of Wisconsin Press, vol. 70(1), pages 77-87.
    4. McConnell, Kenneth E., 1989. "The Optimal Quantity Of Land In Agriculture," Northeastern Journal of Agricultural and Resource Economics, Northeastern Agricultural and Resource Economics Association, vol. 18(2), October.
    5. 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.
    6. Anna Alberini & Kathleen Segerson, 2002. "Assessing Voluntary Programs to Improve Environmental Quality," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 22(1), pages 157-184, June.
    7. Hediger, Werner, 2003. "Sustainable farm income in the presence of soil erosion: an agricultural Hartwick rule," Ecological Economics, Elsevier, vol. 45(2), pages 221-236, June.
    8. Segerson, Kathleen & Miceli, Thomas J., 1998. "Voluntary Environmental Agreements: Good or Bad News for Environmental Protection?," Journal of Environmental Economics and Management, Elsevier, vol. 36(2), pages 109-130, September.
    9. Anderson, Kym, 2000. "Agriculture's 'multifunctionality' and the WTO," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 44(3), September.
    10. John G. Lee & Philip L. Paarlberg & Maury Bredahl, 2005. "Implementing multifunctionality," International Journal of Agricultural Resources, Governance and Ecology, Inderscience Enterprises Ltd, vol. 4(3/4), pages 216-231.
    11. Rigoberto A. Lopez & Farhed A. Shah & Marilyn A. Altobello, 1994. "Amenity Benefits and the Optimal Allocation of Land," Land Economics, University of Wisconsin Press, vol. 70(1), pages 53-62.
    12. Jiang, Tingsong, 2001. "Earmarking of pollution charges and the sub-optimality of the Pigouvian tax," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 45(4), December.
    13. Jussi Lankoski & Markku Ollikainen, 2003. "Agri-environmental externalities: a framework for designing targeted policies," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 30(1), pages 51-75, March.
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