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Conservation Instruments in Agricultural Economics

Learn about methods to value environmental benefits of agriculture, policy instruments for positive externalities, assessing willingness to pay, conservation instruments like financial incentives, cross-compliance, and planning designation. Understand general principles for promoting conservation and public goods provision in food markets.

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Conservation Instruments in Agricultural Economics

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  1. Promoting conservation and public goods provision Lecture 21. Economics of Food Markets Alan Matthews

  2. What we want to learn • The methods which can be used to value the positive environmental benefits of agriculture to help decide how much to purchase • The range of policy instruments available to encourage the provision of positive environmental externalities from land management

  3. Measuring environmental benefits • Different kinds of value • Use value • Option value • Existence value • Bequest value

  4. Assessing willingness to pay • Travel cost method • Restricted to measuring use value by visitors • Hedonic price method • Restricted to measuring use value by those who trade in land or houses • Contingent valuation method • Only method to measure non-use values • Potential biases • Benefit transfer techniques

  5. Conservation instruments • Education and voluntary stewardship • Huge amount of environmental goods provided as a result of sense of stewardship • Suggests potential for education as a conservation instrument • But also suggests that compensation payments could undermine this ethical approach

  6. Conservation instruments • Financial incentives • Management agreements with individual farmers (UK Wildlife and Countryside Act) • Flat rate universal schemes (Irish REPS) • Tiered competitive tendering schemes (UK Countryside Stewardship Scheme)

  7. Conservation instruments • Cross-compliance • Becomes possible with shift from market price support to direct payments • Increases the public return from direct payments • But may legitimise direct payments which otherwise would be hard to justify

  8. Conservation instruments • Planning designation • Are farmers entitled to compensation for restrictions? (raises the environmental reference level again) • But what if the value of the resource depends on active management? • Public acquisition • National Parks • Conservation easements

  9. General principles • Assign priority to agri-environment services which are more highly valued or which can be provided at lower cost • Targeting is desirable, but there is a trade-off with administration and monitoring costs • Importance of farmer participation and awareness

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