Environmental payments in conflicting situations between nature provision and cost minimization: a political economy approach

We will analyze a newly emerging conflict within the second pillar of the rural development policy of the EU: a conflict between those farmers, who want to participate in high nature value agriculture, and farmers, who feel negatively impacted by supporting nature provision. We see a link through competition for land between nature provision in agriculture and cost minimal production of commercial farmers. The idea is to model this conflict using a political bargain approach and make a contribution on how to solve the conflict by innovative institutional arrangements. The power of groups will be analyzed and what governments can do.conflict, political economy, nature provision, Community/Rural/Urban Development,

Modelling economies of scale, energy use and farm size to reduce GHG: On contrasting "High-Tec"-agriculture with labour intensive farming

Questions on farm structures (such as superiority of large farms) are typically linked to economies of scale. Economies of scale are normally a matter of investments in energy consuming technologies (large machinery). In contrast there is the issue of remaining prevalence of labour intensive, small farms (meant to be inferior); but which are less energy intensive. We see a revival in theoretical and policy debates on pathways of agricultural development concerning energy use. We analyse, how one can develop an approach that includes incentives to save energy and produce less GHG, and develop a framework of coexistence of farm types.Green house gas emission, farm structure, policy modelling, Agricultural and Food Policy, Farm Management,

Linking Crop Rotation and Fertility Management by a Transition Matrix: Spatial and Dynamic Aspects in Programming of Ecosystem Service

This paper deals with crop rotation as a method to pest control and soil fertility from an economic point of view. In the past farmers created complex rotations to benefit from processes like natural pest control, recycling of organics, pollination and water retention. Cropping orders utilizing small fields to accommodate long lists of crop sequences were a major feature of agriculture. Today we are faced with large fields and monoculture. Usually, attempts to recognize economic benefits from rotation through modelling are meagre because of complexity. We address the issue of complexity as well as spatial and dynamics aspects of long run benefits by suggesting feasible types of modelling crop rotations (dynamic optimization). A newly introduced transfer matrix shall delineate impacts of crop compositions in period t to fertility of land in t+1. Categorizing different states of nature (which have to be communicated in line with farmers’ knowledge of externalities) it can be implemented into modern crop rotations.crop rotation modelling, spatially explicit and dynamic programming, Crop Production/Industries, Resource /Energy Economics and Policy,

Biodiversity Conservation through Public Management in Cultural Landscapes: Integrating Economic and Ecological Evaluation of Species by Shadow Prices

The paper deals with the problem of finding relative values for species in the case of biodiversity conservation in a cultural landscape. We use the concept of shadow prices to derive flexible functional forms that allow us to conduct an interactive and internal valuation process. The paper is organized such as that (1) the theory of shadow price derivation is presented in a framework of programming. (2) We obtain quadratic objective functions for participant in the valuation process. (3) Quasi demand and supply functions are derived from which we can simulate a market. (5) The special role of ecologists as experts and potential managers of a landscape is ad-dressed and (6), or finally, a balanced solution on values, value oriented management, and species prevalence is provided.Valuation, cultural landscape, species composition and nature provision by farms, Environmental Economics and Policy, Resource /Energy Economics and Policy,

Preservation of Bio-Diversity, Heterogeneity of Farm Practices and Payments for Cultural Landscapes under Inhomogeneous Natural Conditions

The paper explores the question of diversity in agricultural practice as related to bio-diversity and landscape appearance. It starts with the observation that, in the past, diverse natural conditions have considerably impacted on adapted modes of agricultural production, more than today, and that previously performed farm practices were strongly affiliated with specific natural conditions. These practices positively contributed to a motified, diverse and man-made environment which is frequently considered a beautiful landscape. This has changed dramatically. Particularly, where the European countryside is regarded a natural heritage, today, the public seems to be worried about modern farm practices. After the adoption of modern techniques, farmers prefer to apply unified production technologies and tend to set-up uniform farm structures and product mixes as well as land cultivation practices based on purchased inputs. Farm operations equalise natural conditions and contribute to uniform land rents. However, a rising public concern for the preservation of bio-diversity is asking for change and new measures. Additional to regulations on farm practices governments seek to compensate farmers for nature preservation and production of bio-diversity. Presuming that high biodiversity is dependent on diversity in agricultural practice and landscape appearance due to preserved natural conditions, the paper develops a model that links payments to diversity in farm practice and natural conditions. The applied model is landscape-oriented and classifies farm behaviour according to agronomic conditions. A reference system for a unified technology is presented and implications for payments are discussed using a behavioural approach. This behavioural approach focuses on regional dynamics in natural condition as major determinants for bio-diversity and payments as determinants for farm practices. Payments are directed to re-establish diversity in farm practices, counteract current technology dominance, and assure a new exposure to nature, though only partly. Diversity becomes prevalent; notably according to an economic calculus of costs and benefits from taxpayers' point of view.bio-diversity, natural conditions, diversity in farming, payments for nature, Resource /Energy Economics and Policy,

An Application Of Control Theory To Seasonal Food Security

An AEE Working Paper on a mathematical model in an agricultural food deficit country.The article is structured as follows: First, there will be given an introduction in the problem. Second, a formalization of the issue will be conducted using mathematical tools. Third, the model will be solved and at least a fictive empirical application will be presented.The analytical result will be applied to a representative example for a typical food deficit country

Improving Food Quality through Institutional Innovations: Using a Free‐Rider Approach for Collective Action

This paper outlines how a team work approach, recently suggested in institutional economics to overcome the problem of externalities, can be used to promote better food quality. Cost sharing as “team work” is considered a novel institution to improve food quality by giving incentives to overcome the public good character of quality. We translate the approach from negative to positive externalities. Hereby: (1) We make a reference to the current state of the discussion on how food quality depends on efforts of a food industry to get a better image and discuss how much need there is to improve quality. (2) An outline of a mathematical approach of a “team work” is presented in the provision of quality as a positive externality  and (3) the approach is adapted to a likely team building effort in a food industry. Finally some remarks are made how to stimulate a process of team building and the role of a government is addressed. At the core of the paper we see the argument that free riding on quality can be avoided if collective actions or team building processes occur in a community. A team is modeled as partnership of producers in which costs for quality improvement are shared

Application of a Spatial Water Model in a Chinese Watershed

China's fast growing economy has brought some environmental problems, especially in water administration. Inefficiencies in irrigation activities have created severe negative effects to the environment of rural communities, and the more serious water shortages hamper food production, too. Major questions at hand are, how to improve water use efficiency, to reduce negative external effects, to optimize water allocation in agriculture, to invest in water saving technologies, and to assure more water for high value added agriculture. This paper investigates the impacts of irrigation technologies and investments in water saving on the rural economy and the environment. By taking into account individual farmers' inclination to adopt modern water-saving technologies and governments willingness to improve public water transit systems, we optimize water use in a Chinese watershed. The main contribution is a model that shows how to optimize spatial allocation and adoption of irrigation technology given farm and investment costs. The paper employs a mathematical, spatial programming model using GAMS for optimization. It shows the importance of water pricing and discusses various policy measures such as pricing and public conveyance. The model results are of value for policy makers and project managers to allocate water more efficiently, to optimize irrigation projects, and to provide references for farmers in applying water conservation technologies.a spatial model, water use efficiency, adoption of irrigation technology, technology, Resource /Energy Economics and Policy, C61, Q25, Q56,

Nutrition Sensitive Consumption as a Way to Achieve a Healthy Diet: Working with Dissonance as Revaluation of Foods and Respecting Nutritional Norms

This paper deals with a new methodological approach allowing us to bring nutrition sensitive consumption closer to consumers’ attention. We establish a theoretical model in which individual choices (subjective utility) shall correspond better with choices at societal level (objective norms). A first hypothesis is that individual households, in their decisions on what foods to buy, additionally may depend on norms; not only taste. But this creates dissonance. A second hypothesis is: dissonance is minimized. This results in a modification of perceptions and valuation (preference ordering) on possible diets. The idea is to show how norms can modify individual households’ choices

Agrarpolitik als Management öffentlicher Güter: Zur Ökonomik der dezentralen Bereitstellung von Natur in der Kulturlandschaft

Political procedures aimed at solving conflicts of agriculture and the environment are becoming increasingly important. In contrast to previous research, property rights solutions are regarded as inappropriate to solve the conflicts between farming and nature conservation due to transaction costs. The political process is considered as a substitute for market transactions in an agri-environment being a public good and advised as an ecological main structure (EMS). The paper addresses the problem by introducing a public manager who is responsible for the provision of an ecological main structure. It applies a political economy model of social bargaining, shows how a tragedy of the commons problem may prevail in field margin provision, and outlines a social optimum for an EMS. Finally, it provides for a solution to the problem of establishing socially acceptable rules for individuals in a political economy framework. In that solution farmers’, environmentalists’, and a manager’s interests are considered simultaneously and the paper provides for a unified solution on the basis of a derived public objective function.Political bargaining model, ecological main structure, nature provision, Agricultural and Food Policy, Environmental Economics and Policy,