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Environmental public goods from agriculture: what to pay for?

The argument for taxpayers financing the provisioning of environmental public goods by farmers is compelling: under-provision of public goods is a classical instance of market failure. The relevant empirical questions that remain are therefore:

  • • where are these goods being generated by farmers?
  • • what levels are being generated? and
  • • how much risks being lost if direct payments (i.e. SPS) are reduced?

In some regions of the EU, the existence of environmental public goods is unequivocal, e.g. semi-natural grasslands in Jonkoping County in Sweden provide habitat for several hundred endangered plants, as do other extensive grassland regions in the EU. In other regions, there is no compelling evidence of a link to public goods, as is the case for a large, intensively farmed wheat field where the overriding concern is the generation of negative externalities such as nitrate pollution and soil erosion (e.g. Vysocina). There is in general insufficient knowledge about the effects of agricultural practices on biodiversity (Kleijn and Sutherland, 2006, 2003) and the ecosystem services provided by biodiversity (Zhang et al., 2007). It is therefore of the utmost importance, given the limited budgets for environmental protection and other important societal goals, that claims of public good provision are backed up by evidence. Otherwise, there is a real risk that purported payments for public goods (e.g. a general payment to all EU farmers) will in fact simultaneously support the continued degradation of the environment that has been brought about by the intensification of agriculture over recent decades, while providing insufficient environmental support in regions or situations where it is genuinely motivated.

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