Re-considering Agri-Environmental Schemes premiums: the impact of fixed costs in sign-up decisions (original) (raw)
Related papers
Re-considering agri-environmental schemes premiums: the impact of fixed cost in sign-up decisions
HAL (Le Centre pour la Communication Scientifique Directe), 2008
Agro-environmental schemes are the main policy instrument currently available in the EU to promote environmentally friendly farming practices. Nevertheless, the adoption rate of these measures is still limited. This paper develops a profit maximizer theoretical framework to explain by the Heckman method the farmer sign-up decision and the area to put under an AES characterised by a change in the crop pattern. One weakness of this methodology is that it does not account for the upper censure of the enrolled area which might be constrained by the available eligible area. Thererefore, the adoption decision is also compared with a simple tobit with a lower and an upper bound for the whole sample. Technical factors as well as social capital variables are taken into consideration in order to take into account also transaction costs. Estimation results shows that there is an adoption barrier derived from the initial farm technical assets and know-how affecting the fixed compliance costs of introducing the new crop In addition, there is an adoption barrier derived from Transaction Costs which are reduced in the presence of social networks.
RePEc: Research Papers in Economics, 2013
Agri-environmental schemes (AES) are the main policy instrument currently available in the EU to promote environmentally friendly farming practices. However, the degree of uptake in some areas is extremely low. In order to better understand this low uptake rate, this paper develops a profit maximiser theoretical framework which takes into account the potential presence of fixed costs when applying to an AES based on introducing an alternative cropping system (alfalfa). Estimation results show that there is an adoption barrier derived from the lack of know-how of the new crop that affects the fixed compliance costs. In addition, there is an adoption barrier derived from the contract transaction costs which are reduced in the presence of social networks.
Does Intensity of Change Matter? Factors Affecting Adoption in Two Agri-Environmental Schemes
2008
Agri-environmental schemes are the main policy instrument currently available in the EU to promote environmentally friendly farming practices. Nevertheless, the adoption rate of these measures is still limited. This paper develops a theoretical framework to explain farmer sign-up decision and tests whether factors affecting this decision differ depending on the level of requirement of each measure. The model is tested with two different AES in Spain implying a low and a high farm management change. Technical factors are found to be most relevant when significant farm practice changes are at stake while the role of farmer characteristics is significant when minor changes are required. In both cases, social capital and farmer attitudes still explain part of the sign-up decision. In order to increase adoption rates, different promotion activities should be undertaken according to different measures, increasing technical suitability when major changes are at stake and enhancing social capital and better targeting to relevant farmers for measures with lower requirements.
Fixed costs involved in crop pattern changes and agri-environmental schemes
2009
Agri-environmental schemes are the main policy instrument currently available in the European Union to promote environmentally friendly farming practices. Nevertheless, the adoption rate of these measures is still limited. This paper develops a profit maximizer theoretical framework to explain the farmer's sign-up decision and the area to put under an agri-environmental measure characterised by a change in the crop pattern. The application concerns an agri-environmental measure awarding the introduction of alfalfa in cereal farms in Natura 2000 designated areas of Aragon (Spain). The econometric specification accounts for both the upper censoring of the enrolled area, constrained by the available eligible area, and the self-selection of contractors according to the extra-profit of their enrolment. To test the absence of fixed costs of enrolment, a simple tobit with a lower and an upper bound, that corresponds to the non fixed costs situation, is compared to the censored model with selection. Estimated specifications based on the enrolled area do not provided normally distributed residues and are not suitable to carry out the likelihood ratio test. Estimated specifications based on the share of enrolled area in the eligible area provide normally distributed residues. The likelihood ratio test rejects the absence of fixed costs. Technical factors as well as social capital variables are taken into consideration as determinants of technical and transaction costs. Estimation results show that there is an adoption barrier derived from the know-how affecting the fixed compliance costs of introducing the new crop. In addition, there is an adoption barrier derived from transaction costs which are reduced in the presence of social networks. These results suggest that a non linear payment mechanism or auctions might be suitable to ensure a better coverage of Natura 2000 eligible areas by the contracts, with a limited increase in related public expenditures. qualitative and limited dependent variable model JEL classifications: Q12, Q15, Q52, Q57, Q58, H23, D23, D24, C24, C34, C51
Does intensity of change matter? Factors affecting adoption of agri-environmental schemes in Spain
Journal of Environmental Planning and Management, 2010
Agri-environmental schemes are the main policy instrument currently available in the EU to promote environmentally friendly farming practices. Nevertheless, the adoption rate of these measures is still limited. This paper develops a theoretical framework to explain farmer sign-up decision and tests whether factors affecting this decision differ depending on the level of requirements of each measure. The model is tested with two different AES in Spain which imply low and high farm management changes. Technical factors are found to be most relevant when significant farm practice changes are at stake while the role of farmer characteristics is significant when minor changes are required. In both cases, social capital and farmer attitudes still explain part of the sign-up decision. In order to increase adoption rates, different promotion activities should be undertaken according to different measures, increasing technical suitability when major changes are at stake and enhancing social capital and better targeting to relevant farmers for measures with lower requirements.
Does intensity of change matter? Factors affecting adoption in two agi-environmental schemes
HAL (Le Centre pour la Communication Scientifique Directe), 2008
Agri-environmental schemes are the main policy instrument currently available in the EU to promote environmentally friendly farming practices. Nevertheless, the adoption rate of these measures is still limited. This paper develops a theoretical framework to explain farmer sign-up decision and tests whether factors affecting this decision differ depending on the level of requirements of each measure. The model is tested with two different AES in Spain which imply low and high farm management changes. Technical factors are found to be most relevant when significant farm practice changes are at stake while the role of farmer characteristics is significant when minor changes are required. In both cases, social capital and farmer attitudes still explain part of the sign-up decision. In order to increase adoption rates, different promotion activities should be undertaken according to different measures, increasing technical suitability when major changes are at stake and enhancing social capital and better targeting to relevant farmers for measures with lower requirements.
Land Use Policy
Effectiveness of Agri-Environmental Schemes (AESs) as tools to enhance the rural environment can be achieved not only by increasing uptake rates, but also by avoiding participating farmers abandoning the scheme once they are in. For this reason, it is important to also consider what affects farmers' decisions to remain in the scheme rather than leave it at the end of the contractual obligation. However, up to now, there has been very little on this issue in the literature. The paper offers a contribution to this by revealing the role of determinants like the farmer's and farm structural characteristics, farmer's learning process, neighbourhood effect and the impact of changes in the policy design on the farmer's decision to remain in the scheme over a long time scale. This is examined in a long-standing scheme in the case study area, the Veneto Region of Italy. The paper uses duration analysis and is based on longitudinal panel-data of the entire population of 2000-2015 adopters. By using only data available in official regional records, it also provides regional policy-makers with an operational tool that is useful to analyse the impact of their AES design changes. The results of the duration models show that a larger farm size, a younger farmer age, the succession in the family farm, and the farmer's positive attitude towards the environment, trigger longer durations in AES. Similarly, the impact of the accumulation of the farmer's experience in the scheme management, as well as the neighbourhood effect increase the probability of remaining. Lastly, the changes in policy tailoring and targeting also have a positive impact on maintaining the farmer in the scheme. The paper concludes by noting that duration analysis can deliver useful results in order to guide policymakers in the effort to steer higher levels of farmers' persistence in the scheme and provides some recommendations for a more mature agro-environmental policy design.
Determinants of agri-environmental measures adoption: do institutional constraints matter?
Environmental Economics, 2017
As a consequence of the ‘greening’ process of the Common Agricultural Policy (CAP), the demand for an evaluation of actual agri-environmental measures (AEMs) calls for a deeper analysis of this policy instrument implementation. The idea behind this paper is that farmer willingness to participate is a necessary, but not always sufficient, condition for explaining the local adoption of AEMs. Specifically, the authors test whether AEMs adoption depends on the farms and farmers’ characteristics, and also on the local political and institutional framework. Discriminating between genuine farmer incentive and attitude towards AEMs, from the role of the local institutional environment, appears a crucial step towards a better understanding of agri-environmental schemes uptake. Empirical evidence found in the ‘universe’ of AEMs eligible farms located in the Lombardy region gives support to this hypothesis.
Agri-environmental schemes in the European Union: the role of ex ante costs
Ecosystems, 2008
The purpose of this paper is to analyse land allocation between competing agri-environmental contracts taking into account institutional issues and farm household and farm characteristics. We consider a Biodiversity Protection Contract, Landscape Management Contract and a Restriction on Intensive Practises Contract. The paper shows that it is important to study the choice for an agrienvironmental contract in combination with the