Voluntary Agreements and the Environmental Efficiency of Participating Farms

Voluntary environmental agreements have been popular with government agencies in several countries. However, many questions remain about their efficiency as a regulatory tool. Recent analyses suggest that they are more effective than conventional regulatory or economic approaches when dealing with diffuse pollution and when innovation processes at the source are necessary to define effective regulation. This paper applies an activity-based framework to assess the contribution of such a voluntary agreement to the environmental performance of farms participating in a whole farm plan in the Southern part of Belgium. Using a cross-section of 52 farms, our results show that farms entering into environmental agreements are environmentally more efficient than non-participating farms in terms of the preservation and provision of landscape features. However, their environmental efficiency with regard to the reduction of non-desirable outputs, such as organic nitrogen, is mostly determined by technical efficiency and not by participation in the whole farm plan.