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Counterfactual approach for assessing agri-environmental policy: The case of the Finnish water protection policy

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  • Lankoski, Jussi E.
  • Ollikainen, Markku

Abstract

This paper applies counterfactual approach to assess the impacts of agri-environmental programs. Counterfactual analysis evaluates policies answering questions: what would have happened if...? We develop a theoretical framework for counterfactual analysis based on the inter-linkages between the behaviour of agents and the response of environmental systems to the economic decisions. We apply our model to assess the performance of the Finnish Agri- Environmental Programme to reduce agricultural nutrient runoff to the Baltic Sea. Counterfactual analysis allows us to determine both the unit effectiveness of the measures included in the Programme and its preventive impact. We demonstrate that the Finnish Agri- Environmental Programme does not achieve its goals, because it fails to anticipate farmers’ responses to incentives created by the Common Agricultural Policy and the Agri-Environmental Programme itself. The social cost-benefit analysis of the Program shows negative net benefits: benefits from reduced nutrient loading are much lower than support payments.

Suggested Citation

  • Lankoski, Jussi E. & Ollikainen, Markku, 2011. "Counterfactual approach for assessing agri-environmental policy: The case of the Finnish water protection policy," 122nd Seminar, February 17-18, 2011, Ancona, Italy 98993, European Association of Agricultural Economists.
  • Handle: RePEc:ags:eaa122:98993
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    File URL: http://purl.umn.edu/98993
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    References listed on IDEAS

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    1. Sami Myyrä & Elise Ketoja & Markku Yli-Halla & Kyöisti Pietola, 2005. "Land Improvements under Land Tenure Insecurity: The Case of pH and Phosphate in Finland," Land Economics, University of Wisconsin Press, vol. 81(4).
    2. Jussi Lankoski & Markku Ollikainen & Pekka Uusitalo, 2006. "No-till technology: benefits to farmers and the environment? Theoretical analysis and application to Finnish agriculture," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 33(2), pages 193-221, June.
    3. Ing-Marie Gren, 2001. "International Versus National Actions Against Nitrogen Pollution of the Baltic Sea," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 20(1), pages 41-59, September.
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    Cited by:

    1. Qiuzhen Chen & Timo Sipiläinen & John Sumelius, 2014. "Assessment of Agri-Environmental Externalities at Regional Levels in Finland," Sustainability, MDPI, Open Access Journal, vol. 6(6), pages 1-21, May.

    More about this item

    Keywords

    Environmental policy evaluation; counterfactual analysis; nutrient runoff; the Baltic Sea; Agricultural and Food Policy; Q5; H23; H43;

    JEL classification:

    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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