Multifunctional agriculture: The effect of non-public good on socially optimal policies
We develop a general framework for multifunctional agriculture, which includes not only public goods but also rural viability as a non-public good item. We contribute to the literature in two ways. First, we demonstrate how the broader definition of multifunctional agriculture differs from the agri-environmental multifunctionality, and how agri-environmental policy should be reformed to include these aspects. We show that rural viability entails adjusting fertilizer tax and buffer strip subsidy below their first-best Pigouvian levels to reflect the direct and indirect employment effects of agricultural production. Moreover, we show that when non-agricultural land use is present, an additional, non-agricultural instrument is needed to adjust the amount of land allocated to agriculture to its optimal level. In a parametric model calibrated to Finnish agricultural conditions and Finnish valuation of agri-environmental amenities and rural viability, we assess how the socially optimal provision of non-public good multifunctionality relates the socially optimal agri-environmental multifunctionality.
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- 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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"Agriculture and the environment,"
Handbook of Agricultural Economics,
in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 2, chapter 23, pages 1249-1313
- Chantal Le Mouel, 2004.
"Impacts of alternative agricultural income support schemes on multiple policy goals,"
European Review of Agricultural Economics,
Foundation for the European Review of Agricultural Economics, vol. 31(2), pages 125-148, June.
- Herve Guyomard & Chantal Le Mouel & Alexandre Gohin, 2004. "Impacts of alternative agricultural income support schemes on multiple policy goals," Working Papers 155435, Institut National de la Recherche Agronomique, France.
- 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.
- 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.
- Jeffrey M. Peterson & Richard N. Boisvert & Harry de Gorter, 2002. "Environmental policies for a multifunctional agricultural sector in open economies," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 29(4), pages 423-443, December.
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