Ollikainen, Markku and Lankoski, Jussi (2005) Multifunctional agriculture: The effect of non-public goods on socially optimal policies. MTT Agrifood Research Finland.
- Published Version
We develop a general framework for multifunctional agriculture, which includes not only public goods but also rural viability as a non-public good item. We contribute to the literaure in two ways. First, we demonstrate how the broader definition of multifunctional agriculture differs from the agri-environmental multifunctionality, and how agri-environmental policy should be reformed to include these aspects. We show that rural viability entails adjusting fertilizer tax and buffer strip subsidy below their first-best Pigouvian levels to reflect the direct and indirect employment effects of agricultural production. Moreover, we show that when non-agricultural land use is present, an additional, non-agricultural instrument is needed to adjust the amount of land allocated to agriculture to its optimal level. In a parametric model calibrated to Finnish agricultural conditions and Finnish valuation of agri-environmental amenities and rural viability, we assess how the socially optimal provision of non-public good multifunctionality relates the socially optimal agri-environmental multifunctionality.
|Keywords:||biodiversity, employment, nutrient runoffs, rural viability|
|Research affiliation:||Finland > Luke Natural Resources Institute|
|Deposited By:||Koistinen, Riitta|
|Deposited On:||30 Dec 2009 11:14|
|Last Modified:||12 Apr 2010 07:42|
|Additional Publishing Information:||MTT Discussion Papers 1 2005|
Repository Staff Only: item control page