Social Benefits of Multifunctional Agriculture in Finland

Abstract

This study aims at assessing the costs and benefits of multifunctional agriculture, and it is one of the very first studies using a quantitative approach to this new subject. The starting point is that if current farm subsidies are regarded as means to maintain the multifunctional characteristics of agriculture, what happens if subsidies are reduced. The effects of the decline in agricultural support on multifunctional characteristics of agriculture in Finland are estimated using the cost-benefit analysis (CBA). Only a part of the consequences can be assessed by the CBA due to lack of data on the economic value of many elements of multifunctional agriculture. Hence, the results should not be generalised too strongly, but they still provide useful information for the political decision-making. Concerning further research, we should study, inter alia, what the so-called correct level of compensation for the adequate supply of public goods would be, and what kind of means of agricultural policy are the most efficient to unambiguously enhance the multifunctional character of agriculture.multifunctional agriculture, non-market benefits, externalities, cost-benefit analysis, Finland, Institutional and Behavioral Economics,