IDEAS home Printed from https://ideas.repec.org/p/wiw/wiwrsa/ersa13p805.html
   My bibliography  Save this paper

Biodiversity and risk management in agriculture: what do we learn from CAP reforms? A farm-level analysis

Author

Listed:
  • Elisa Gatto

    ()

  • Alba Marino
  • Guido Signorino

Abstract

On-farm agricultural biodiversity conservation has long been recognized as a fundamental resource to the maintenance of ecologic and economic functions. In this light, planned on-farm biodiversity is represented as an economic asset providing a flow of ecological services to direct use of farmers. In particular, crop-biodiversity, measuring diversity within and among wild and domesticated species, has been found to significantly contribute to the productivity of agricultural production through its effects on agricultural yields and incomes. Moreover, agricultural risk-management literature recognizes the safety role of diversification in the presence of market, climatic and other hazards; given that crops react differently to external shocks, risk-averse farmers will choose to allocate their land to different crops in order to face environmental risks. Among the factors affecting biodiversity, institutional failures at different scales are reported as potential cause of biodiversity loss both in developed and developing areas. Within the European context, subsequent CAP changes toward deregulation and adoption of environmental protection measures have been investigated with the aim to assess their potential effect on farm economic and ecological strategies; the present paper seeks to contribute to this strand of literature by empirically assessing the relationship between farmers' diversification choice and CAP decoupled intervention measures. Focusing on the CAP policy changes occurred since 2003, the paper asks the following research question: has crop-biodiversity been positively affected by the implementation of a system of payments progressively delinked from quantity and quality of production? In order to answer this question, the paper empirical strategy relies on farm-level information drawn from the RICA database which collect annual data on the structure and economic performance of Italian agricultural firms. The analysis is carried out on firms specialized in the cereal sector, as this is a sector that experienced much of the changes coming from the reform of the CAP intervention system. To that purpose, a biodiversity function is estimated along the observed sample covering the 2004-2007 period; biodiversity, measured as spatial diversity, is expressed as a function of a set of variables capturing socio-economic farm characteristics (inputs use, degree of agricultural innovation, age of farm manager), land and agronomic conditions (soil fertility, irrigation, altitude), and the variable measuring CAP support. Finally, we include a dummy variable for regional location in order to account for the effect of specific cultural and physical elements on farmers' production choice.

Suggested Citation

  • Elisa Gatto & Alba Marino & Guido Signorino, 2013. "Biodiversity and risk management in agriculture: what do we learn from CAP reforms? A farm-level analysis," ERSA conference papers ersa13p805, European Regional Science Association.
  • Handle: RePEc:wiw:wiwrsa:ersa13p805
    as

    Download full text from publisher

    File URL: http://www-sre.wu.ac.at/ersa/ersaconfs/ersa13/ERSA2013_paper_00805.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. E. Meng, M. Smale & Brennan, John P. & Hu, Ruifa, 2003. "Determinants of spatial diversity in modern wheat: examples from Australia and China," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 28(1), January.
    2. Bhaskar, Arathi & Beghin, John C., 2009. "How Coupled Are Decoupled Farm Payments? A Review of the Evidence," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 34(1), April.
    3. Moro, Daniele & Sckokai, Paolo, 2011. "The impact of pillar I support on farm choices: conceptual and methodological challenges," 122nd Seminar, February 17-18, 2011, Ancona, Italy 99836, European Association of Agricultural Economists.
    4. Viaggi, Davide & Raggi, Meri & Gomez y Paloma, Sergio, 2010. "An integer programming dynamic farm-household model to evaluate the impact of agricultural policy reforms on farm investment behaviour," European Journal of Operational Research, Elsevier, vol. 207(2), pages 1130-1139, December.
    5. Van Dusen, M. Eric & Taylor, J. Edward, 2005. "Missing markets and crop diversity: evidence from Mexico," Environment and Development Economics, Cambridge University Press, vol. 10(04), pages 513-531, August.
    6. Cisilino, Federica & De Vivo, Carmela & Henke, Roberto & Pupo D'Andrea, Maria Rosaria & Vanni, Francesco, 2. "The effects of decoupling on the COP sector in Italy: an ex-post performance analysis," Politica Agricola Internazionale - International Agricultural Policy, Edizioni L’Informatore Agrario, issue 2.
    7. James Rude, 2008. "Production Effects of the European Union's Single Farm Payment," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 56(4), pages 457-471, December.
    8. Paolo Sckokai & Daniele Moro, 2006. "Modeling the Reforms of the Common Agricultural Policy for Arable Crops under Uncertainty," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(1), pages 43-56.
    9. Salvatore Di Falco & Jean-Paul Chavas, 2008. "Rainfall Shocks, Resilience, and the Effects of Crop Biodiversity on Agroecosystem Productivity," Land Economics, University of Wisconsin Press, vol. 84(1), pages 83-96.
    10. Nastis, Stefanos A. & Michailidis, Anastasios & Mattas, Konstadinos, 2011. "Crop biodiversity repercussions of subsidized organic farming in Greece," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114628, European Association of Agricultural Economists.
    11. Mark Brady & Konrad Kellermann & Christoph Sahrbacher & Ladislav Jelinek, 2009. "Impacts of Decoupled Agricultural Support on Farm Structure, Biodiversity and Landscape Mosaic: Some EU Results," Journal of Agricultural Economics, Wiley Blackwell, vol. 60(3), pages 563-585.
    12. Salvatore Di Falco & Jean-Paul Chavas, 2007. "On Crop Biodiversity, Risk Exposure, and Food Security in the Highlands of Ethiopia," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(3), pages 599-611.
    13. Viaggi, Davide & Raggi, Meri & Gomez y Paloma, Sergio, 2011. "Farm-household investment behaviour and the CAP decoupling: Methodological issues in assessing policy impacts," Journal of Policy Modeling, Elsevier, vol. 33(1), pages 127-145, January.
    14. Barry K. Goodwin & Ashok K. Mishra, 2005. "Another Look at Decoupling: Additional Evidence on the Production Effects of Direct Payments," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(5), pages 1200-1210.
    15. Benin, S. & Smale, M. & Pender, J. & Gebremedhin, B. & Ehui, S., 2004. "The economic determinants of cereal crop diversity on farms in the Ethiopian highlands," Agricultural Economics, Blackwell, vol. 31(2-3), pages 197-208, December.
    16. Di Falco, Salvatore & Perrings, Charles, 2005. "Crop biodiversity, risk management and the implications of agricultural assistance," Ecological Economics, Elsevier, vol. 55(4), pages 459-466, December.
    17. Rude, James, 2007. "Production Effects of the European Union’s Single Farm Payment," Working Papers 7335, Canadian Agricultural Trade Policy Research Network.
    18. Smale, M. & Meng, E. & Brennan, J. P. & Hu, Ruifa, 2003. "Determinants of spatial diversity in modern wheat: examples from Australia and China," Agricultural Economics, Blackwell, vol. 28(1), pages 13-26, January.
    19. Melinda Smale & Jason Hartell & Paul W. Heisey & Ben Senauer, 1998. "The Contribution of Genetic Resources and Diversity to Wheat Production in the Punjab of Pakistan," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(3), pages 482-493.
    20. Salvatore Di Falco & Jean-Paul Chavas & Melinda Smale, 2007. "Farmer management of production risk on degraded lands: the role of wheat variety diversity in the Tigray region, Ethiopia," Agricultural Economics, International Association of Agricultural Economists, vol. 36(2), pages 147-156, March.
    21. Stefan Baumgärtner & Martin F. Quaas, 2010. "Managing increasing environmental risks through agrobiodiversity and agrienvironmental policies," Agricultural Economics, International Association of Agricultural Economists, vol. 41(5), pages 483-496, September.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    crop-diversity; risk management; CAP reforms;

    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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wiw:wiwrsa:ersa13p805. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gunther Maier). General contact details of provider: http://www.ersa.org .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.