Local compensation payments for agri-environmental externalities: a panel data analysis of bargaining outcomes

We analyse local compensation payments made to farmers for providinglandscape amenities in Alpine tourist communities. These paymentsresult from political bargaining at the municipal level. Paneldata estimation shows that the probability of introducing compensationpayments depends positively on the benefits of landscape amenities.Although no impact of service provision cost is found, transactioncosts at different levels of the bargaining process reduce theprobability of payments. Compensation payments mainly occurin communities where the provision of agricultural landscapeservices is perceived as relatively low and the diversity ofthe countryside seems to be endangered. We argue that municipalcompensation payments are an important supplement to nationaland European Union policy measures in support of less-favouredareas.     

The EEC less favoured areas directive: Implementation and impact on upland land use in the UK

This article contains an analysis of the implementation of the Less Favoured Areas Directive in the UK. The LFA policy of the EEC provides for the support of agriculture in designated areas, in order to sustain rural populations and to protect the countryside. In the UK, the directive has simply been absorbed into existing policy for upland areas. This policy seeks to maximize the production of sheepmeat and store cattle through agricultural intensification. Grants and subsidies have led to considerable deterioration of the upland landscape and wildlife resources of the uplands, with little discernable impact on maintaining rural populations.     

Agri‐environmental Instruments for an Integrated Rural Policy: An Economic Analysis

The new Rural Development Regulation of the EU reflects the shift of attention within rural areas from agricultural production towards rural development and embraces both farmers and non‐farm residents. While agricultural production is required to comply with environmental standards, rural areas also have to fulfil the growing demand for landscape, outdoor recreation and wildlife conservation. This paper develops a model of a rural area where farmers and non‐farm residents live together. A central government uses a combination of two‐policy instruments ‐ direct compensation payments and public services ‐ aimed at encouraging farmers to adopt environmentally beneficial practices and at the same time to increase the provision of countryside amenities and the sustained vitality of the rural area. The optimal mix of the policy instruments is evaluated under various governmental objectives. The analysis suggests that a combination of direct payments to farmers with the supply of local public services is a promising tool for rural policy development initiatives in the EU.     

Why do transaction costs of agricultural policies vary?

Policy related transaction costs (TCs) is an important issue when evaluating different policy options. However, TCs are often not taken into account in policy evaluations, but may be as important for efficiency as the direct production costs. Different policies may result in different TCs, and the main aim of this article is to explore possible reasons for these differences. We compare the level of TCs for 12 different agricultural policy measures in Norway, and we analyze the causes of the differences along three different dimensions: asset specificity, frequency, and point of policy application. At the national level we find that all three dimensions are of importance when explaining the differences, while variation in TCs incurred by farmers are mainly due to differences in point of policy application and asset specificity. Data show that direct price support has the lowest TCs, while more direct payments for environmental amenities has the highest.     

The Impacts of Elicitation Context on Stated Preferences for Agricultural Landscapes

Statements of willingness to pay (WTP) have been shown to be dependent upon the framing of the hypothetical market. In this paper we investigate the effects of variations in the timing and location of choice experiment questions concerned with conservation of a UK national park, as research involving measurement of psychological well‐being suggests potential differences for the same individual dependent upon when and where preferences are elicited. We apply the choice experiment technique to the valuation of changes in upland agricultural and semi‐natural landscapes in the Peak District National Park in the UK, to investigate whether timing and location of elicitation (context) affects the value associated with changes in ecosystem services under different management regimes. Four treatments are employed – using the same sample of individuals answering the same choice scenarios – to measure WTP ex‐ante (off site), in situ (on site), and ex‐post at two different time intervals (off site). We show that our on‐site (in situ) treatment generates very different estimates of preferences than any of the off‐site treatments. That stated preferences associated with environmental goods are so context dependent may have implications for the use of stated preferences in policy analysis in terms of identifying how environmental policy is funded and the divergence in value attributed to sampling different populations.     

Efficient income redistribution for a small country using optimal combined instruments

In this paper I improve Gardner's surplus transformation curve framework by assuming that governments are able to vary many policy instruments simultaneously instead of only one. I use my framework to find the combination of the currently used instruments which provides the most efficient income redistribution for the Austrian bread grains market. Comparing the most efficient policy with the actual policy reveals that 464 × 10⁶ Austrian shillings were wasted. I theoretically compare for a small country the transfer efficiency of every possible pair of the four major agricultural policy instruments: floor price, (production) quota, co-responsibility levy, and deficiency payments. Without considering the marginal cost of public funds (MCF), deficiency payments cum quota (equal to a fully decoupled direct income support) is the most efficient policy, succeeded by floor price cum quota, and floor price cum deficiency payments. If the MCF is taken into account, the ranking crucially depends on the market parameters, the transfer level, and the value of the MCF. For the Austrian bread grains market, I empirically demonstrate that given the present support level, a fully decoupled direct income support redistributes income most efficiently as long as the MCF is lower than 1.17. Beyond this value a floor price cum quota policy becomes more efficient. A floor price cum deficiency payments policy is never superior to the floor price cum quota.     

The Role of the Common Agricultural Policy in Enhancing Farm Income: A Dynamic Panel Analysis Accounting for Farm Size in Italy

As a multi-objective policy, the EU Common Agricultural Policy continues to secure significant income support for farmers as one of the nine specific objectives. We estimate the income transfer efficiency of a broad set of pivotal policy measures, focusing on the effects of farm structure on income transfer efficiency. We use dynamic modelling, based on a micro-data panel of Italian farms for the period 2008–2014, allowing for endogeneity, simultaneity bias, and omitted variables. In line with previous studies and economic expectations, we find that decoupled direct payments provide the highest contribution to agricultural incomes, followed by agri-environmental payments and on-farm investment subsidies. Coupled payments have no significant impacts on farmers’ income. Generally, for all analysed Common Agricultural Policy measures, large farms benefit from greater transfer efficiency levels compared with medium and small farms. These differences among instruments and across farms suggest that policy-participation costs may play a pivotal role, together with the economic structure of farms, in determining the income transfer efficiency of CAP policies.     

Quantifying the multifunctionality of fjord and mountain agriculture by means of sociocultural and economic valuation of ecosystem services

The objective of this study was to define the value of the main market and nonmarket functions of fjord and mountain agroecosystems in Nordic countries by means of the ecosystem services framework. First, we used qualitative methods (interviews of farmers and other stakeholders in the area of study) to identify sociocultural perceptions of multifunctional agriculture. Next, we used survey-based stated-preference methods to rank and value in economic terms the most important functions (corresponding to the four types of ecosystem services) according to the local (residents of the study area) and the general (residents of a nearby area) populations. The sociocultural perceptions of multifunctionality among local stakeholders were similar, but differences in the relative importance of the functions reflected particular interests (agriculture compared with tourism). Both the local and the general populations attached great importance to the production and availability of quality foods. The general population showed very homogeneous preferences among ecosystem services, but local people rated them very differently. Local people ranked a more agricultural landscape very high. The total economic value of fjord and mountain agroecosystem was 850 € per person per year. The willingness to pay for the provision of ecosystem services under a policy scenario of further development of multifunctional agriculture clearly exceeded the current level of public support. The welfare loss that society would experience in a scenario of further abandonment of agriculture was even greater. We discuss the establishment of payments for ecosystem services for addressing the undersupply of nonmarket functions of agriculture.     

Can Direct Payments Facilitate Agricultural Commercialisation: Evidence from a Transition Country

We investigate the impact of direct payments on agricultural commercialisation in Kosovo. Kosovo is one of the poorest countries in Europe but, with European assistance, provides substantial funds to support agriculture, made up of many small and often semi‐subsistence farms. Thus, the effect of this support is a central policy issue. Identifying the effect of direct payments on market participation faces endogeneity issues arising from the possible simultaneous determination of participation in support programmes and market participation. In order to achieve proper identification of the endogenous direct payments, we use a strategy of targeted identification search that employs several different methodological approaches. We find that direct payments for fruit and vegetables, and those for cereals and oilseeds have a positive effect on market participation. However, we cannot identify any definite effect of livestock payments.     

Passive farming and land development: A real options approach

The EU's farmers are no longer required to produce commodities to receive direct payments as long as they keep their land in good condition. Some believe this is bad for development because it encourages passive farming. We evaluate, using a real options approach, the implications of decoupled payments for the desirability and optimal timing of agricultural land development when considering sunk investment costs and uncertain future returns. We find that decoupled payments accelerate development while passive farming increases, by adding managerial flexibility, the value associated with land. We then use the Nash bargaining solution to identify the rental share to be paid for leasing land. We show that a deal for the lease of land can always be reached, but that the facility to use passive farming as an outside option allows landowners to extract policy rents, thereby undermining the potential for the Basic Payment Scheme to support tenant farmers’ incomes.     

European Agriculture after Brexit: Does Anyone Benefit from the Divorce?

The UK exited the EU on 31 January 2020, with a transition period agreed as part of the Withdrawal Agreement. During this transition period the UK and the EU will decide on their future trading relationship. No matter what form this relationship takes, there will be disturbances to agri‐food markets. This study analyses four different scenarios with increasing barriers to trade, ranging from a very close relationship similar to the European Economic Area to a distant relationship in which the UK and EU trade on Most Favoured Nation terms, using the EU focused global agricultural sector model CAPRI. In the UK, food prices will increase in all scenarios, making consumers in the UK the biggest losers. Only in a free trade agreement scenario does the UK show an unambiguous positive net welfare gain in just the agri‐food sector. In the case of the European Economic Area scenario, which assumes continued access to the single market, the net welfare impact would depend on the size of the UK’s continued contribution to the EU. In the EU, declining food prices would benefit consumers but the sum of the loss in farmers’ incomes and the UK’s EU CAP contribution would be much greater than the consumer’s gain. These impacts in agricultural markets under different future trade arrangements will also be influenced by the UK’s agricultural policy changes in direct payments as well as by possible further UK trade liberalisation after the end of the transition period.     

Impacts of Decoupled Agricultural Support on Farm Structure,Biodiversity and Landscape Mosaic: Some EU Results

The decoupling of direct payments from production represents a substantial reform of the Common Agricultural Policy (CAP). Farmers are no longer required to produce commodities to be entitled to support but only to keep land in Good Environmental and Agricultural Condition. If output declines as a result, there is concern that landscape services produced jointly with commodities will also decline. The aim of this paper is to assess the long‐term effects of the 2003 reform on farm structure, landscape mosaic and biodiversity for a sample of EU regions. Impacts are quantified using a spatial agent‐based modelling approach by simulating agricultural development with links to indicators of landscape value. Our results demonstrate that eliminating the link between support payments and production has possible negative consequences for the landscape, but only under particular circumstances. It is shown that these effects could be offset by strengthening (Pillar II) agri‐environmental schemes. Further the single payment scheme results in higher land rental prices which reduces its ability to achieve its goal of providing income security for farmers. Implications of these results for the direction of continued CAP reform are discussed.     

Simulating land use changes under alternative policy scenarios for conservation of native forests in south-central Chile

In this study, we combined policy analysis with landscape change modeling to simulate outcomes of alternative forest conservation instruments proposed by opposing policy coalitions. In 1992, concern over rapid land conversion to timber plantations (Pinus radiata and Eucalyptus spp.) in Chile gave rise to a protracted policy process resulting in the 2008 Native Forest Law (NFL), which subsidizes reforestation and management with native forest. To date, however, NFL has had little impact on native forest conservation. To understand how the policy process that created the NFL shaped its outcomes, we employed the Dyna-CLUE modeling approach to simulate land use changes in south-central Chile from 1993 to 2007, based on 3 scenarios: (1) enactment of NFL in 1993 when the law was originally debated, and the different configurations of subsidies and regulations proposed in the NFL policy debate by (2) the industrial forestry coalition and (3) the forest conservation coalition. We observed no major difference in native forest loss between simulated outcomes of the industry-advocated policy and the actual NFL legislation. The conservation coalition’s policy scenario increased native forest area, primarily in shrub steppe areas, but also via conversion of pine plantations if incentive payments were large enough. However, NFL payments are inadequate to make native forest management a viable economic land use alternative to industrial pine plantations, which are also subsidized in Chile. Gains in native forest cover occurred mostly on lands under ancestral indigenous claims (unrelated to the discussion of the NFL). We conclude that the NFL, even if enacted in 1993, would have been ineffective in preventing native forest loss, because tree plantations are more profitable and NFL regulations were weakened by the industrial coalition that opposed—and strongly shaped—the final legislation. Effective incentives for protecting early-successional forests and shrublands are needed to mitigate further losses and foster recovery of Chile’s native forests.     

The ecosystem approach,ecosystem services and established forestry policy approaches in the United Kingdom

A series of approaches have been proposed for natural resource management and biodiversity conservation in recent decades. In the important forestry sector, two of the most dominant policy paradigms have been multi-purpose forestry and sustainable forest management. The Convention on Biological Diversity, amongst other transnational commitments, added the ecosystem approach and its related idea of ecosystem services to this succession which is increasingly becoming the basis for natural resource management, including in the United Kingdom (UK). However, this latest addition raises the stimulating question of whether in forestry the ecosystem approach and the associated ecosystem services concept really constitute something fundamentally new, or are merely an extension or re-branding of existing policy approaches. This paper contributes to a lively contemporary debate surrounding the ecosystem approach and ecosystem services, by examining how these two interrelated but distinctly different concepts are currently understood and adopted within UK forestry and in the context of established forestry policy paradigms. For this purpose, I undertook a review of the scholarly literature and legal and policy documents which have been triangulated with a survey of the attitudes, interpretations and opinions of forestry stakeholders through expert interviews. The analysis suggests that in the UK forestry sector, as elsewhere, the frequency of, often broad and ambiguous approaches to natural resource management and biodiversity conservation in general, and forestry policy and management in particular, are causing confusion amongst some stakeholders, who, unsurprisingly frequently conflate concepts seemingly without understanding the details. However, a clear understanding of the differences and similarities of these important concepts, stemming from overlapping but different disciplines, is crucially important for successful policy implementation and sustainable forest management. This article attempts to contribute to such a clarification and to further interdisciplinary understanding.     

Addressing the social landscape dimensions: The need for reconciling cross scale assessments for capturing Cultural Ecosystem Services (CES)

This special issue integrates eleven papers focussing on indicators able to convey the multiple expectations that society has concerning agricultural land. As scale issues have been so far overlooked within this research topic, a particular focus of this themed issue is to highlight the need for reconciling assessments across scales. The shared purpose of the contributions is to examine how the multiple societal expectations concerning agrarian landscapes might be incorporated into land use policy at different governance levels.A core set of these papers were presented in the symposium “Linking social indicators across scales”, to the European Congress of the International Association of Landscape Ecology (IALE) in September 2013 in Manchester, UK. This symposium was organized to create the time and space for a discussion on the issues of scale when capturing societal preferences concerning agrarian landscapes. While the landscape scale was specifically addressed by four papers, seven papers examined broader geographic units in addition to up-scaling and downscaling issues.     

The Divergence in Canada-U.S. Grain and Oilseed Policies

This paper discusses U.S. and Canadian farm programs for grains and oilseeds. In spite of the passage of the U.S. FAIR Act in 1996, where subsidies were to be greatly reduced, subsidies reached an all-time high of over $20 billion in 2000. In Canada, just the opposite occurred, as support for the grains and oilseeds sector has dropped sharply since the mid-1990s. In addition to differences in support levels, the farm prog rams are very different. NISA and AIDA are prominent in the landscape in Canada, while under FAIR, loan deficiency payments are a key ingredient. We provide some explanations for the divergence in farm programs between the two countries, including a discussion of rent seeking and public choice.     

Disadvantage and economic viability: characterising vulnerabilities and resilience in upland farming systems

Less Favoured Areas (LFA) were designated to support farming activity on land with limited productive potential. However, progressive land abandonment in these areas questions the rationale and targeting of support payments to maintain viable farming enterprises. Using micro level data on farm businesses over the period 2003-2016 matched to land capability and spatial data we identify the distribution of viable and vulnerable enterprises in Less Favoured Areas. We find five categories of household based on progressive quality of life thresholds, namely i. vulnerable, ii. sustainable, iii. viable, iv. resilient, and v. robust. A proportional odds model measured the effect of biophysical and remote disadvantage on predicting these states of viability, along with farm family lifecycle factors. Whilst we would expect higher proportions of disadvantaged farmland to be negatively related to viability, when combined with rural remoteness this increases the magnitude of the effect. However, clear succession planning and tenancy arrangements suggest that approaches to management of the business and the farm family life-cycle may overcome some of these disadvantages. These results have to be considered against the UK’s planned withdrawal from the Common Agricultural Policy. This offers opportunities to provide a more nuanced approach to targeting and supporting disadvantaged regions beyond current criteria. However, there would seem to be dissonance between the proposed payment for public goods agenda, which is results orientated, and support for correcting natural disadvantages where opportunities for delivery of these public goods will be limited.     

Landscape as a Focus for Integrating Human and Environmental Processes

The landscape has long been an important object of rural policy, particularly in terms of protecting scenic areas. Increasingly, however, landscape is seen as a multifunctional and holistic entity, which provides a framework for the governance and interdisciplinary study of spatial units. A central dilemma in the maintenance of cultural landscapes is that the historical practices which produced them are often obsolete, and new social and economic forces may fail to reproduce their valued properties. Sustainable development strategies therefore seek to instil ‘virtuous’ circles in cultural landscapes, linking society and economy to environmental service functions and land uses, in order to generate mutually reinforcing feedback loops resulting in socially preferred outcomes. We explore ways of investigating these linkages as a basis for future rural research and policy. We conceptualise cultural landscapes as ‘socio‐ecological systems’ (SESs), and consider their capacity for resilience and stability. Noting that resilient systems are characterised, not by simple equilibria, but by ‘basins of attraction’, we argue the need to understand the ways in which SESs stabilise within a particular basin, or move to an alternative. In particular, we reflect on the dynamics of ‘adaptive cycles’ that may lead to changes in system state. Finally, we discuss the development of appropriate models as tools for investigating whether a landscape is trending towards stability within a ‘vicious’ or a ‘virtuous’ circle, and evaluating potential interventions to alter this trajectory.     

Brexit: How Will UK Agriculture Fare?

There is little doubt that Brexit would have significant implications for UK agriculture, a sector with strong trade links to the EU and strong reliance on CAP income support. This article reports preliminary results from employing a Computable General Equilibrium Model, a Partial Equilibrium Model and Farm Level Models to explore selected trade and domestic policy scenarios post‐Brexit. These allow for the estimation of changes in producer prices, production and farm incomes against a baseline scenario of continued EU membership. Under a Free Trade Agreement with the EU, agricultural impacts are relatively modest. By contrast, unilateral removal of import tariffs has significant negative impacts on prices, production and incomes. Adoption of the EU's WTO tariff schedule for all imports favours net importers (e.g. dairy) and harms net exporters (e.g. sheep). Given the strong dependence of most UK farms on direct payments, their removal worsens negative impacts of new trade arrangements and offsets positive impacts. Impacts vary across different types and sizes of farm, but also regionally. However, the period of adjustment to new trade and domestic policy conditions may prove very challenging for a large number of farm businesses.     

Deforestation analysis in protected areas and scenario simulation for structural corridors in the agricultural frontier of Western Bahia,Brazil

The aim in this paper was to evaluate the spatial distribution of protected areas defined by law and their importance as structural corridors. The study area was 7,559,783.69 ha located in Western Bahia (Northeast Brazil), restricted to the limits of the Urucuia Group (Upper Cretaceous), where there is strong agribusiness growth. Currently, a major dilemma in Brazilian public policy arises from the conflicting interests of environmental conservation and increased food production. Brazilian environmental protection policies include the implantation of Protected Areas (Full Protection Units and Sustainable Use Units) and the adoption of the National Forest Act (Permanent Preservation Areas and Legal Reserves). In this context, we delimited illegal land-use in Permanent Preservation Areas (PPAs) adopting the intersection between land-use/land-cover data from PRISM/ALOS image classification for the years 2007–2010 and PPA vectors. We performed the temporal analysis in PAs considering land-use/land-cover data from Landsat TM image classification for the years 1988, 1992, 1996, 2000, 2004, 2008 and 2011. Finally, we performed a Morphological Spatial Pattern Analysis (MSPA) to evaluate whether PPAs alone are sufficient as structural corridors. Hypothetical scenarios were simulated to increase the potential of PPAs as structural corridors. The calculation of MSPA attributes was conducted considering 3 edge widths: 15 m (1 pixel), 510 m (34 pixels), and 1005 m (67 pixels). Four scenarios were simulated, considering a gradual increase in preserved areas. The results show that illegal land use is contained within PPA and protected areas. The scenario simulations present alternatives to increase the connectivity of the fragments and ensure the maintenance of ecological and hydrological services. Rapid agricultural expansion without proper landscape planning can compromise the sustainability of ecosystem services and the recharge zone of the Urucuia aquifer.