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Evaluating the Effects of Farm Programs: Results from Propensity Score Matching

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  • Pufahl, Andrea
  • Weiss, Christoph R.

Abstract

The paper applies a non-parametric propensity score matching approach to evaluate the effects of two types of farm programs (agri-environment (AE) programs and the less favoured area (LFA) scheme) on input use and farm output of individual farms in Germany. The analysis reveals a positive and significant treatment effect of the LFA scheme for farm sales and the area under cultivation. Participants in AE schemes are found to significantly increase the area under cultivation (in particular grassland), resulting in a decrease of livestock densities. Furthermore, participation in AE programs significantly reduced the purchase of farm chemicals (fertilizer, pesticide). We also find substantial differences in the treatment effect between individual farms (heterogeneous treatment effects). Farms which can generate the largest benefit from the program are most likely to participate.

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File URL: http://purl.umn.edu/44149
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Paper provided by European Association of Agricultural Economists in its series 2008 International Congress, August 26-29, 2008, Ghent, Belgium with number 44149.

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Date of creation: 2008
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Handle: RePEc:ags:eaae08:44149
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Keywords: evaluation; farm programs; propensity score matching; Agricultural and Food Policy;

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Find related papers by JEL classification:
  • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
  • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
  • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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  1. Michael Lechner, 2002. "Program Heterogeneity And Propensity Score Matching: An Application To The Evaluation Of Active Labor Market Policies," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 205-220, May.
  2. Marco Caliendo & Sabine Kopeinig, 2008. "Some Practical Guidance For The Implementation Of Propensity Score Matching," Journal of Economic Surveys, Wiley Blackwell, vol. 22(1), pages 31-72, 02.
  3. James J. Heckman & Hidehiko Ichimura & Petra Todd, 1998. "Matching As An Econometric Evaluation Estimator," Review of Economic Studies, Oxford University Press, vol. 65(2), pages 261-294.
  4. Mary Clare Ahearn & Jet Yee & Penni Korb, 2005. "Effects of Differing Farm Policies on Farm Structure and Dynamics," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(5), pages 1182-1189.
  5. Rajeev H. Dehejia & Sadek Wahba, 1998. "Causal Effects in Non-Experimental Studies: Re-Evaluating the Evaluation of Training Programs," NBER Working Papers 6586, National Bureau of Economic Research, Inc.
  6. Jeffrey Smith & Petra Todd, 2003. "Does Matching Overcome Lalonde's Critique of Nonexperimental Estimators?," University of Western Ontario, Centre for Human Capital and Productivity (CHCP) Working Papers 20035, University of Western Ontario, Centre for Human Capital and Productivity (CHCP).
  7. Heckman, James J. & Lalonde, Robert J. & Smith, Jeffrey A., 1999. "The economics and econometrics of active labor market programs," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 31, pages 1865-2097 Elsevier.
  8. Shaik, Saleem & Helmers, Glenn A., 2006. "An Examination Of Farm Program Payments On Farm Economic Structure," 2006 Annual meeting, July 23-26, Long Beach, CA 21215, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  9. Barbara Sianesi, 2001. "Propensity score matching," United Kingdom Stata Users' Group Meetings 2001 12, Stata Users Group, revised 23 Aug 2001.
  10. Thilo Glebe & Klaus Salhofer, 2007. "EU agri-environmental programs and the "restaurant table effect"," Agricultural Economics, International Association of Agricultural Economists, vol. 37(2-3), pages 211-218, 09.
  11. Lori Lynch & Wayne Gray & Jacqueline Geoghegan, 2007. "Are Farmland Preservation Program Easement Restrictions Capitalized into Farmland Prices? What Can a Propensity Score Matching Analysis Tell Us? ," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 29(3), pages 502-509.
  12. Sascha O. Becker & Andrea Ichino, 2002. "Estimation of average treatment effects based on propensity scores," Stata Journal, StataCorp LP, vol. 2(4), pages 358-377, November.
  13. Nigel Key & Michael J. Roberts, 2006. "Government Payments and Farm Business Survival," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(2), pages 382-392.
  14. Joe Dewbre, 2006. "The Impact of Coupled and Decoupled Government Subsidies on Off-Farm Labor Participation of U.S. Farm Operators," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(2), pages 393-408.
  15. C. S. Kim & G. Schluter & G. Schaible & A. Mishra & C. Hallahan, 2005. "A Decomposed Negative Binomial Model of Structural Change: A Theoretical and Empirical Application to U.S. Agriculture," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 53(2-3), pages 161-176, 06.
  16. Nigel Key & Ruben N. Lubowski & Michael J. Roberts, 2005. "Farm-Level Production Effects from Participation in Government Commodity Programs: Did the 1996 Federal Agricultural Improvement and Reform Act Make a Difference?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(5), pages 1211-1219.
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