The environmental dimension of multifunctionality: economic analysis and implications for policy design

Summary

In this study an analytical model was developed, and then empirical results were obtained by calibrating the model to Finnish data. First, the farmer's private optimim was compared to the social optimum where nutrient runoffs, landscape diversity, and agrobiodiversity were valuated at their social marginal values. Next, solutions were developed for the first-best differentiated policy instruments and the second-best uniform and semi-uniform policy instruments. Finally, farm income support measures and environmental cross-compliance schemes were analysed.