Applied economics of multifunctional agriculture

The thesis consists of an introduction and four articles that can be read independently of each other. Article 1: "Biodiversity on Swedish pastures: Estimating biodiversity production costs", estimates the costs of producing biological diversity on Swedish permanent grasslands. A simple model is introduced where biodiversity on pastures is produced using grazing animals. In the article, biological diversity is considered a quantitative measure where a given quantity can be produced either by a small area with high quality or a larger area with lower quality. Box-Cox transformations are used in the empirical analysis and the results indicate that the biodiversity production costs differ between the two investigated regions. Article 2: "Transaction Costs and Agri-Environmental Policy Measures: are Preferences Influencing Policy Implementation?", investigates the transaction cost determinants of a Swedish agri-environmental policy measure. The problem is whether unavoidable 'economic factors' drive the transaction costs, or if potentially avoidable 'political factors' have an undue impact. Although initial results indicate that the share of voters voting for particular political configurations influences the level of transaction costs, the extreme bounds analysis shows that only the economic variables are robust with respect to model specifications. Article 3: "Multifunctionality – what does the literature tell us?", surveys the literature on multifunctional agriculture. It is shown i.a. that the level of transaction costs has to be considered when developing policies, that even optimal policies may be controversial from a trade perspective and that the spatial variation both in production and values should be accounted for. Article 4: "Are the Mediterranean countries competitive in fresh fruit and vegetable exports?", investigates the competitiveness of ten Mediterranean countries' fruit and vegetable sectors, utilizing various indicators and the results of a constant market share analysis. The results show that the competitiveness generally has declined in the 1990s and that the countries do not fully utilize their potentials.