Evaluation of agri-environmental policies

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Evaluation of agri-environmental policies

• Lecture 22.
• Economics of Food Markets
• Alan Matthews

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What we want to learn

• The Rural Environment Protection Scheme in
  Ireland as an example of an agri-environment
  scheme
• Issues in evaluating an agri-environment scheme

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Irish government policies

• Nature conservation
• National Parks and Wildlife Service
• National Biodiversity Plan
• Agri-environment scheme
• Rural Environment Protection Scheme

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Designated Habitats

• Natural Heritage Areas
• These are habitats of national importance. The
  legal basis on which Natural Heritage Areas
  (NHAs) are selected and designated is the
  Wildlife Amendment Act, 2000. There are
  approximately 1200 NHAs in Ireland (750,000 ha)
  and are of huge importance to flora and fauna.
  Examples include Tullaghan Rock Bog (Roscommon),
  Cootehill Church as a roosting place for
  Natterer's Bats (Cavan), Thomastown wet grassland
  and woodland (Kilkenny).
• Special Areas of Conservation
• Special Areas of Conservation (SACs) are habitats
  of European importance. Their legal basis is the
  EU Habitats Directive. There are approximately
  400 SACs in Ireland. SACs are important for flora
  and fauna. Examples include The Burren (Clare),
  Moyclare Bog (Offaly),The Loughan Turlough
  (Kilkenny)
• Special Protection Areas
• Special Protection Areas (SPAs) are habitats of
  European importance. Their legal basis is the
  European Bird Directive. They are of huge
  importance to birds. There are approximately 100
  in Ireland. Examples include Examples Shannon
  Callows, Lough Oughter and associated lakes
  (Cavan), Mullet / Blacksod Bay complex (Mayo)

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Nature conservation

• Designated habitats now cover about 11.5 of
  farmland in Ireland
• NPWS Farm Plan Scheme
• pays farmers and landowners for losses incurred
  through restrictions caused by the designation of
  lands as an SAC or an SPA or to pay for certain
  actions which are of benefit to nature and are
  agreed in a farm plan.
• Directed towards farmers who do not wish to be
  part of REPS

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Facts about REPS in Ireland

• REPS 1 from 1994 1999
• over 45,500 farmers joined REPS
• approximately 33 of the utilisable agricultural
  area was farmed under REPS guidelines
• over 590 million was paid to farmers.
• REPS 2 from 2000 2006
• DAF target was 70,000 farmers
• Initially reduced uptake compared to REPS 1
  took until 2005 for numbers to reach 45,000 again
• the number of REPS farmers can grow to 53,000 and
  over
• the projected expenditure is 1.9 billion.
• REPS 3 2004 2006
• Higher payments and more emphasis on biodiversity
• Expect to have over 50,000 participants in either
  REPS 2 or REPS 3 in 2006

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REPS 1

• Introduced 1994 for five year
• First nation-wide scheme to encourage farmers to
  protect natural and cultural heritage
• Farmers enter into a 5-year contract to farm in
  accordance with an agri-environment plan drawn up
  by approved planner
• Maximum area for which payment is made is 40 ha,
  basic rate of payment 160 per ha.
• Scheme has 11 measures directed towards
  controlling nitrogen use and stocking rates,
  controlling waste and effluent around the
  farmyard, protecting water quality, hedges and
  archaeological or historical features on farm
• Extra payments for supplementary measures
  (organic farming, rare breeds, public access,
  farming in designated areas)
• Farmers must undergo a training course in
  agri-environmental management

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REPS 3

• Entered into force 2004. New scheme involves
  higher payments and more emphasis on
  biodiversity. Farmers two additional
  undertakings.
• One must come from seven Category 1 options.
  These are the creation of a new habitat, hedgerow
  rejuvenation, new hedgerow establishment,
  additional stone wall maintenance, green cover
  establishment, environmental management of
  setaside and increased arable margins.
• Nine further Category 2 options are traditional
  hay meadows, species rich grassland, increased
  watercourse margins, exclusion of access to
  watercourses, tree planting, nature corridors,
  increased archaeological buffer margins,
  management of publicly accessible archaeological
  sites and landscaping farmyards. Options chosen
  cannot be changed during the course of the plan.

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Evaluating REPS

• Additionality?
• Has land management changed as a result of
  participation in REPS?
• Is there evidence of benefits? Importance of
  monitoring
• Deadweight?
• The extent to which scheme payments pay for
  outcomes that would have happened in any case
• If management changes, the difference between
  what the participant would be prepared to accept,
  and the level of payment offered.
• Reversibility?
• The extent to which the benefits bought by a
  policy can be reversed if the policy is removed.
• Administrative and transactions costs

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REPS objectives

• 70 of farmers agreed REPS 1 was primarily an
  income supplement and secondly and environmental
  protection scheme. 60 of planners agreed with
  this statement (An Taisce, 2002).
• OASIS categorises REPS under Income support as
  sub-category under Employment
• The Rural Environmental Protection Scheme (REPS)
  is an income support scheme for farmers run by
  the Department of Agriculture and Food.

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REPS 1 evaluation

• Highest uptake of scheme with drystock (esp.
  sheep) and tillage farms, lowest uptake among
  intensive dairy farms
• Larger farms under-represented
• 50 of participants come from six counties
  (Donegal, Mayo, Roscommon, Galway, Clare and
  Cork)
• Match performance of REPS farms with non-REPS
  intensive (gt 170 kg per ha organic N) and
  non-REPS extensive farms (lt 170 kg limit)
• REPS farms had significantly increased investment
  (pollution control and animal housing), but no
  impact on total nitrogen and phosphorous output
  (Hynes and Murphy, 2002)

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Evaluating REPS

• Teagasc evidence that REPS farmers have lower
  fertiliser use than non-REPS farmers
• Self-selection bias in evaluation
• If the scheme attracts extensive farmers to
  participate in the first place because they have
  little to lose through enrolment, then finding
  that participants have lower fertiliser use than
  non-participants is not really evidence that the
  scheme has succeeded
• Use of matched samples to try to control for
  initial conditions. Hynes and Murphy (2002)
  compare changes on REPS and non-REPS extensive
  farms

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Carty, J., 2003, Teagasc REPS Conference
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Carty, J., 2003, Teagasc REPS Conference
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Hynes and Murphy, 2002 Department of Economics
Working Paper No. 60, National University of
Ireland Galway
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UK and Northern Ireland experience

• Two schemes
• Environmentally Sensitive Areas which are
  concentrated areas
• Countryside Stewardship Scheme national
  coverage outside ESA

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Countryside Stewardship Scheme

• Farmers are paid for conservation and public
  access to countryside
• Each Stewardship agreement runs for 10 years and
  is a unique package selected from a menu of over
  100 different possible items
• Scheme is competitive and not all applications
  are successful
• All applications are assessed for their
  environmental added value
• Standard payment rates

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The future of REPS

• Aim was to increase participation to 70,000
  farmers by 2006 will reach just over 50,000
• Very limited monitoring of environmental data (An
  Taisce, 2002) no physical indicators collected
• REPS 4 now part of the 2007-2013 RDP

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Tiered approach to environmental payments
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The future of REPS

• Under EU legislation, farmers can only be paid
  for going beyond statutory norms in farm
  management
• REPS farmers had to observe 170 kg/ha organic N
  limit, compared to 210 kg/ha in draft Nitrates
  Directive. But now this will be lowered to 170
  kg/ha
• Example of Cavan bye-laws
• REPS was co-financed 75 by the EU and 25 by the
  Irish Exchequer over 200m annually.
• But Irish taxpayer must fund 50 of scheme in
  future. EU funding comes out of the RDR envelope
  is it the best use of these funds?