Is organic farming inefficient, or are indicators of economic performance of agriculture incomplete?

Organic farming is expected to alleviate the environmental burden of agriculture, since it rules out the use of chemicals such as synthetic fertilizers, pesticides, herbicides. However, organic farming technology may turn out to be less efficient when evaluated by conventional productivity measures that are less informative regarding environmental efficiency. We derive a framework for a combination of more comprehensive indicators reflecting whether organic farming increases sustainability in agriculture and how much of the total agricultural value added is produced at the expense of environmental deterioration. We show that it is important to separate flow and stock effects of pollution so that aggregate measurement is consistent with conventional national accounting. Shadow pricing of undesirable output and policy implications are discussed. For adoption of a technology and allocative efficiency in the agricultural sector, economic policy instruments should be redesigned and proper incentives through prices should be used

What price recreation in Finland? – A contingent valuation study of non-market benefits of public outdoor recreation areas

Basic services in Finnish national parks and state-owned recreation areas have traditionally been publicly financed and thus free of charge for users. Since the benefits of public recreation are not captured by market demand, government spending on recreation services must be motivated in some other way. Here, we elicit people’s willingness to pay (WTP) for services in the country’s state-owned parks to obtain an estimate of the value of outdoor recreation in monetary terms. A variant of the Tobit model is used in the econometric analysis to examine the WTP responses elicited by a payment card format. We also study who the current users of recreation services are in order to enable policymakers to anticipate the redistribution effects of a potential implementation of user fees. Finally, we discuss the motives for WTP, which reveal concerns such as equity and ability to pay that are relevant for planning public recreation in general and for the introduction of fees in particular.non-market valuation; payment card; recreation; recreation fees; taxes; user fees; wllingnes-to-pay; WTP

Do the opportunity costs of providing crop diversity differ between organic and conventional farms? The case of Finnish agriculture

The attractiveness of targeted environmental policies on farmlands depends crucially on the opportunity costs of the conservation programs. We use a crop diversity index as an indicator of environmental output to compare the efficiency of conventional and organic crop farms. Technical efficiency scores are estimated by applying data envelopment analysis to a sample of Finnish farms for the period 1994 – 2002. We also estimate shadow values, or the opportunity costs, of producing crop diversity. Our results show that there is variation in the shadow values between farms and the technology adopted. The findings provide a basis for designing cost-effective policy instruments such as auctions for conservation payments

Biodiversity and economic incentives in agriculture : integrating bird fauna values into decision-making

Our optimal control model identifies economic reasons as to why several farmland bird populations have dramatically declined in modern agricultural landscapes. By integrating bird fauna values into decision-making on cereal crop choice, herbicide use and hunting bag size, we derive those economic instruments needed for enhancing biodiversity on farmland and reversing the decline of grey partridge (Perdix perdix) populations. Based on the Finnish data available, we illustrate how the optimal acreage subsidy for organically-grown rye areas, the herbicide tax rate and the grey partridge hunting licence fee could be estimated in monetary terms. The procedure to derive and value the first-best policy instruments is applicable for various components of agri-environmental schemes implemented throughout the European Union

Modelling environmental effects of agriculture : the case of organic rye and grey partridge

Our optimal control model identifies economic reasons as to why farmland bird populations have dramatically declined in modern agricultural landscapes. By integrating recreational wildlife values into farm level decision-making on arable crop choice and herbicide use, we derive those economic instruments needed for creating suitable conditions for game bird species on farmland. Based on the Finnish data available on the grey partridge (Perdix perdix), we illustrate how the optimal acreage subsidy for organically-grown areas, herbicide tax rates and the hunting licence fee could be estimated in monetary terms. Finally, we discuss the benefits and costs of cultivating organic cereals which will enhance preservation of the grey partridge

Promoting demand for organic food under preference and income heterogeneity

We examine the design of policies for promoting the consumption of green products under preference and income heterogeneity using organic products as an example. Two instruments are considered: a price subsidy for the organic products and a tax on the conventional products. Under income disparity, consumers with high income always prefer a socially optimal subsidy to a socially optimal tax, while low-income consumers prefer a tax on conventional products. When environmental policy is determined by the median voter, the policies implemented tend to be stricter than socially optimal policies if income differences are large

Modelling Environmental Effects of Agriculture: The Case of Organic Rye and Grey Partridge

Our optimal control model identifies economic reasons as to why farmland bird populations have dramatically declined in modern agricultural landscapes. By integrating recreational wildlife values into farm level decision-making on arable crop choice and herbicide use, we derive those economic instruments needed for creating suitable conditions for game bird species on farmland. Based on the Finnish data available on the grey partridge (Perdix perdix), we illustrate how the optimal acreage subsidy for organically-grown areas, herbicide tax rates and the hunting licence fee could be estimated in monetary terms. Finally, we discuss the benefits and costs of cultivating organic cereals which will enhance preservation of the grey partridge.environmental benefits, grey partridge, herbicides, optimal control, rye, Environmental Economics and Policy, Q57, Q18, H41,

Promoting Demand for Organic Food Under Preference and Income Heterogeneity

We examine the design of policies for promoting the consumption of green products under preference and income heterogeneity using organic products as an example. Two instruments are considered: a price subsidy for the organic products and a tax on the conventional products. Under income disparity, consumers with high income always prefer a socially optimal subsidy to a socially optimal tax, while low-income consumers prefer a tax on conventional products. When environmental policy is determined by the median voter, the policies implemented tend to be stricter than socially optimal policies if income differences are large.taxation, preference heterogeneity, income disparity, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety,

Discerning welfare impacts of public provision of recreation areas

This study presents a framework for investigating responses to the supply of public recreation opportunities when supply affects both probability of use and frequency of use days. These components are used to estimate the marginal social net benefits of an exogenous increase in the supply of public recreation opportunities. The study investigates distributional patterns of visiting behavior and benefit estimates for alternative supply strategies, i.e., reduced distance or increased acreage. The results indicate that the probability of participation and the number of use days respond differently to alternative supply strategies and that response varies by income group.Resource /Energy Economics and Policy,

Green Accounting, Air Pollution and Health

Human capital is an important component of economic growth. The article extends a theoretical model for comprehensive national accounting to the welfare effects of pollution on human capital. The model includes a production externality in the form of a flow of air pollutants that cause both direct disutility and indirect welfare effects by negatively affecting the productivity of labor. We show that defensive medical expenditures or healthcare costs allocated to mitigating the disutility of air pollution should not be deducted from conventional net national product (NNP), whereas the value of the percieved disutility of illness episodes caused by pollution should be subtracted from NNP. We derive a marginal cost-benefit rule for an optimal level of pollution given its negative health effects. The rule can be used for determining an optimal tax on harmful emissions. Finally, we outline a scheme for empirical comprehensive accounting and for estimation of an emissions tax.