Promoting conservation and public goods provision

1
Promoting conservation and public goods provision

• Lecture 29.
• 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
The environmental reference level

• What is a benefit? What is environmental
  pollution?
• Polluter pays concept is a social construct
• Wetlands farmers vs environmentalists
• Preservation of tropical rain forests
• Access to farmland for recreation
• Traditional farm buildings
• Animal welfare
• Good of Good Farming Practice defines the current
  reference level

4
Measuring environmental benefits

• Different kinds of value
• Use value
• Option value
• Existence value
• Bequest value

5
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

6
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

7
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)

8
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

9
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

10
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