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Unintended consequences of environmental policies: the case of set-aside and agricultural intensification

Author

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  • Raja Chakir

    (ECO-PUB - Economie Publique - INRA - Institut National de la Recherche Agronomique - AgroParisTech)

  • Alban Thomas

    (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique)

Abstract

Set-aside policies providing agronomic and ecological benefits have been mainstream practices in European agriculture. Because they may lead to intensification on cultivated land, they can however have mixed environmental effects. To evaluate the indirect impact of a set-aside policy on crop intensification, we consider two elasticity indicators with respect to set-aside subsidy: chemical input demand and intensity of input use. We estimate a structural, multi-output micro-econometric model on a panel of French farmers from 2006 to 2010, accounting for multivariate selection on crops and land use (corner solutions). We estimate both a parametric and a more robust semi-nonparametric estimator, to detect deviations from normality and homoskedasticity. Our results show that a set-aside subsidy can provide farmers with incentives to intensify their production, leading to potential adverse environmental effects.

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  • Raja Chakir & Alban Thomas, 2020. "Unintended consequences of environmental policies: the case of set-aside and agricultural intensification," Working Papers hal-02482207, HAL.
  • Handle: RePEc:hal:wpaper:hal-02482207
    Note: View the original document on HAL open archive server: https://hal.science/hal-02482207
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    More about this item

    Keywords

    set-aside; fertilizer and pesticide demand; corner solution; decoupling; land use;
    All these keywords.

    JEL classification:

    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • C34 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Truncated and Censored Models; Switching Regression Models

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