Linkages between Agricultural Policies and Environmental Effects

www.oecd.org/publishing

isbn 978-92-64-09569-4

51 2010 06 1 P -:HSTCQE=U^Z[^Y:

Linkages between Agricultural Policies

and Environmental Effects

Using the OECD Stylised Agri-environmental Pol icy

Impac t Model

Improving the environmental performance of agriculture is a high priority for OECD countries.

But measuring and evaluating the impact of agri-environmental policies on the environment

can be challenging, as it requires linking economic and biophysical models in country-specific

contexts.

The OECD has developed the Stylised Agri-environmental Policy Impact Model (SAPIM),

which can be adapted and applied by researchers and policy makers to better understand

the impact of policies on the agri-environmental conditions in their countries.

This report applies the model to representative farms in Finland, Japan, Switzerland

and the United States. These countries include a wide range of objectives, policy measures

and agri-environmental conditions. The results highlight that when positive or negative environmental

externalities are not taken into account by farmers, then the production choices by farmers will

reflect private costs and benefits. Policies can potentially raise social welfare by taking account

of those externalities.

This report notes that, overall, the diversity of conditions across sectors and countries makes

it difficult to generalise the impact of agri-environmental policies beyond the situations that are

modelled. Nevertheless, some wider policy messages emerge. Drawing on the four case studies

examined, this report recommends that, polluting activites that are not regulated should be included

in policy design; the existing overall policy environment needs to be taken into account in evaluating

agri-environmental policies; and environmental co-benefits and trade-offs need to be recognised.

Green growth policies can stimulate economic growth while preventing environmental degradation,

biodiversity loss and unsustainable natural resource use. The results from this publication contribute

to the Green Growth Strategy being developed by the OECD as a practical policy package

for governments to harness the potential of greener growth.

www.oecd.org/greengrowth

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Linkages between

Agricultural Policies

and Environmental Effects

Using the OECD Stylised

Agri-environmental Pol icy

Impac t Model

Linkages between Agricultural Policies and Environmental Effects Using the OECD Stylised Agri-environmental Pol icy Impac t Model

Please cite this publication as:

OECD (2010), Linkages between Agricultural Policies and Environmental Effects: Using the OECD Stylised

Agri-environmental Policy Impact Model, OECD Publishing.

http://dx.doi.org/10.1787/9789264095700-en

This work is published on the OECD iLibrary, which gathers all OECD books, periodicals and statistical

databases. Visit www.oecd-ilibrary.org, and do not hesitate to contact us for more information.

OECD Green Growth Strategy

512010061cov.indd 1 12-Nov-2010 1:15:59 PM

Linkages between

Agricultural Policies

and Environmental

Effects

USING THE OECD STYLISED

AGRI-ENVIRONMENTAL POLICY IMPACT MODEL

This work is published on the responsibility of the Secretary-General of the OECD. The

opinions expressed and arguments employed herein do not necessarily reflect the official

views of the Organisation or of the governments of its member countries.

ISBN 978-92-64-09569-4 (print)

ISBN 978-92-64-09570-0 (PDF)

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Please cite this publication as:

OECD (2010), Linkages between Agricultural Policies and Environmental Effects: Using the OECD Stylised

Agri-environmental Policy Impact Model, OECD Publishing.

http://dx.doi.org/10.1787/9789264095700-en

FOREWORD – 3

LINKAGES BETWEEN AGRICULTURAL POLICIES AND ENVIRONMENTAL EFFECTS © OECD 2010

Foreword

This study was mandated by the Joint Working Party on Agriculture and the

Environment to examine the links, using a quantitative approach, between various

stylised agricultural policies and environmental outcomes. The study, which draws some

general observations for policies, is based on analysis and data on four countries with

different policy and agri-environmental characteristics: Finland (environmental

regulations, payments and taxes in a crop farm); Japan (nutrient management in a

rice/crop farm); Switzerland (nutrient management in a mixed dairy/crop farm); and the

United States (conservation auctions in a corn/soy farm).

The authors are (in alphabetical order): Andrea Cattaneo, Hsin Huang, Jussi Lankoski

and Hiroki Sasaki. The Secretariat wishes to thank a number of individuals who made

substantive contributions to the four country case studies: Finland – Markku Ollikainen,

who prepared a background paper dealing with manure policies and dairy production;

Japan – Maiko Murayama, Riwako Makita, Osamu Minakawa, Yutaka Shibuya and

Yasuhiko Kurashige; Switzerland – Ali Ferjani, Christian Gazzarin, Peter Kunz, Harald

Menzi, and Albert Zimmermann; and the United States – Marcel Aillery.

Statistical assistance was provided by Véronique de Saint-Martin. The study was

prepared for publication by Françoise Bénicourt and Theresa Poincet. Wilfrid Legg

provided overall guidance.

TABLE OF CONTENTS – 5

LINKAGES BETWEEN AGRICULTURAL POLICIES AND ENVIRONMENTAL EFFECTS © OECD 2010

Table of Contents

Executive Summary .................................................................................................................................. 9

Chapter 1

Introduction ............................................................................................................................................. 13

Chapter 2

General description of the SAPIM framework .................................................................................... 15

Agriculture-environment interactions: Model choices .......................................................................... 15

General framework for agri-environmental externalities in a heterogeneous landscape ...................... 16

Chapter 3

Environmental effects of agricultural policies: Literature review ..................................................... 21

Soil erosion ............................................................................................................................................ 21

Greenhouse gas emissions ..................................................................................................................... 23

Pesticides ............................................................................................................................................... 25

Water quality (nutrient pollution).......................................................................................................... 26

Livestock manure related emissions and policies ................................................................................. 28

Biodiversity and wildlife habitats .......................................................................................................... 29

Broad-ranging agricultural policies and multiple environmental effects .............................................. 29

Farm-level modelling approaches under heterogeneous conditions ..................................................... 30

Chapter 4

Finland: Crop production and entry/exit options with forestry ......................................................... 33

Theoretical framework .......................................................................................................................... 33

Empirical applications using Finnish data ............................................................................................. 41

Policy simulations and results ............................................................................................................... 43

Summary of the Finnish case study ....................................................................................................... 57

Chapter 5

Switzerland: The environmental effects of dairy production ............................................................. 61

Theoretical framework .......................................................................................................................... 63

Empirical application on the basis of Swiss data .................................................................................. 69

Policy simulations and results ............................................................................................................... 74

Summary of the Swiss case study ......................................................................................................... 79

Chapter 6

United States: The environmental effects of crop production and conservation auctions ............... 83

Theoretical framework .......................................................................................................................... 85

Empirical application on the basis of the US Corn Belt ........................................................................ 88

Policy simulations ................................................................................................................................. 91

6 – TABLE OF CONTENTS

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Results ................................................................................................................................................... 91

Summary of the US case study ............................................................................................................. 98

Chapter 7

Japan: Optimal land-use allocation and nitrogen application .......................................................... 101

Policy context and analytical framework ............................................................................................ 101

Theoretical framework ........................................................................................................................ 106

Empirical framework ........................................................................................................................... 109

Policy simulations and results ............................................................................................................. 116

Results ................................................................................................................................................. 123

Summary of the Japanese case study .................................................................................................. 123

Chapter 8

Sensitivity analysis ................................................................................................................................ 127

Sensitivity analysis of model parameters ............................................................................................ 127

Sensitivity analysis with respect to key assumptions .......................................................................... 128

Sensitivity analysis of SAPIM case studies ........................................................................................ 128

Chapter 9

Comparative analysis of results for all case studies ........................................................................... 135

Comparing environmental and economic impacts .............................................................................. 135

Comparative analysis results ............................................................................................................... 137

Chapter 10

Conclusions ............................................................................................................................................ 139

Annex A. The Finnish case study......................................................................................................... 145

Annex B. The Swiss case study: Background data ............................................................................ 147

Annex C. The Japanese case study: Empirical specification ............................................................ 149

Bibliography .......................................................................................................................................... 163

Tables

Table 3.1. Summary of the literature review focused on farm level modelling

under heterogeneous conditions, with a focus on non-point source pollution .................... 31

Table 4.1. Parameter values in the numerical application ..................................................................... 44

Table 4.2. Input use and land allocation: Comparing private and social optima ................................... 46

Table 4.3. Production and environmental effects: Comparing private and social optima ..................... 46

Table 4.4. Profits and social welfare: Comparing private and social optima ........................................ 47

Table 4.5. Input use and land allocation: Agri-environmental policies in isolation .............................. 47

Table 4.6. Production and environmental effects: Agri-environmental policies in isolation ................ 48

Table 4.7. Profits, budget outlays and social welfare: Agri-environmental policies in isolation .......... 49

Table 4.8. Input use and land allocation: Interaction between area payments and AEPs ..................... 50

Table 4.9. Production and environmental effects: Interaction between area payments and AEPs ........ 51

Table 4.10. Profits, budget outlays and social welfare: Interaction between area payments

and AEPs .............................................................................................................................. 51

Table 4.11. Additional parameter values in the numerical application of green auctions ....................... 55

Table 4.12. Input use and land allocation: Flat rate vs alternative auctions ............................................ 56

Table 4.13. Profits, budget outlays and social welfare: Flat rate vs alternative auctions ........................ 57

Table 5.1. Characteristics of systems with different herd types ............................................................ 71

TABLE OF CONTENTS – 7

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Table 5.2. The effects of alternative feeding mixes on the amount of slurry (m³) and excreted

nitrogen and phosphorus (P2O5), kg per cow per year ......................................................... 72

Table 5.3. SAPIM simulation results: The effects of different policy scenarios on profits,

production and land-use decisions ....................................................................................... 75

Table 5.4. SAPIM simulation results: The effects of different policy scenarios on manure

production, manure application, manure exports, nutrient content of manure,

and nitrogen and phosphorus fertilizer application .............................................................. 77

Table 5.5. SAPIM simulation results: Nutrient balances, ammonia emissions, GHG emissions ......... 78

Table 5.6. SAPIM simulation results: The cost-effectiveness of different policy scenarios

on the reduction of nitrogen and phosphorus surpluses ....................................................... 79

Table 6.1. Descriptive abbreviation for different crop/tillage/erodibility combinations ....................... 89

Table 6.2. Policy experiments ............................................................................................................... 92

Table 6.3. Variable and fixed costs of cultivation for different production systems/units

under mean productivity ....................................................................................................... 93

Table 6.4. Private optimum: Input use, production, profits and environmental impacts

under mean productivity ....................................................................................................... 93

Table 6.5. Results: 2.5% buffer strip requirement and 25% tax on fertilizer price ............................... 94

Table 6.6. Results: Combination of nitrogen tax and buffer strip and combination of nitrogen

application limit and buffer strip .......................................................................................... 95

Table 6.7. Average abatement cost (USD/lb of N runoff) for alternative policy scenarios .................. 96

Table 6.8. Results for uniform pricing auction ...................................................................................... 96

Table 6.9. Uniform price auction with -15% decrease in land productivity.......................................... 97

Table 6.10. Uniform price auction with +15% decrease in land productivity ......................................... 97

Table 6.11. Discriminatory payment auction: impact of weights for auction performance .................... 98

Table 7.1. Current agri-environmental policy measures ..................................................................... 102

Table 7.2. Agri-environmental policy objectives and indicators ......................................................... 103

Table 7.3. CH4 and N2O emissions from rice cultivation and agricultural soils .................................. 112

Table 7.4. Marginal abatement costs (in 1990 USD/tC; 2010 Kyoto target) ...................................... 115

Table 7.5. A comparison of estimates of domestic carbon price ......................................................... 115

Table 7.6. A comparison of GHG monetary evaluation methods ....................................................... 116

Table 7.7. Land allocation and fertilizer application ........................................................................... 118

Table 7.8. Total production and total fertilizer use ............................................................................. 119

Table 7.9. N runoff and GHG emission .............................................................................................. 120

Table 7.10. Profit and social welfare ..................................................................................................... 121

Table 8.1. Sensitivity analysis: 10% and 30% shocks to output and fertilizer prices ......................... 130

Table 8.2. Finnish case study: The effects of output and input prices and nitrogen runoff

damage estimate on social welfare (EUR); farmers' profits in social optimum (EUR);

total nitrogen runoff (kg) and nitrogen runoff damage (kg) ............................................... 131

Table 8.3. Japanese case study: 10% and 30% shock in monetary valuation under the social

optimum ............................................................................................................................. 131

Table 8.4. Sensitivity analysis: 25% shocks to parameters in the nitrogen response function ............ 132

Table 9.1. Choice variables, environmental issues and policy instruments covered in different

case studies ......................................................................................................................... 136

Table 9.2. Comparative analysis of nitrogen tax ................................................................................. 137

Table 9.3. Comparative analysis of buffer strips ................................................................................. 138

Table A.1. Estimation of the weights for biodiversity and runoff reduction........................................ 145

Table B.1. Characteristics differentiating dairy production systems analysed by FAT ....................... 147

Table B.2. Emission factors for different combinations of housing system, manure storage

and manure spreading ......................................................................................................... 148

Table C.1. Nitrogen runoff ratio .......................................................................................................... 154

8 – TABLE OF CONTENTS

LINKAGES BETWEEN AGRICULTURAL POLICIES AND ENVIRONMENTAL EFFECTS © OECD 2010

Table C.2. Default conversion factor for different types of organic amendment ................................ 156

Table C.3. N2O emission factors for fertilizer in agricultural soils ...................................................... 159

Table C.4. The amount of carbon sequestration in the case of manure application ............................. 160

Table C.5. Parameter values in the numerical application ................................................................... 161

Figures

Figure 2.1. Private and social optimal land allocation under heterogeneous land quality ...................... 18

Figure 4.1. The spatial properties of the SAPIM .................................................................................... 34

Figure 4.2. Land-use decisions under different policies (over the 40 parcels) ....................................... 53

Figure 4.3. Contribution to social welfare under different policies ........................................................ 54

Figure 6.1. Soil productivity by National Commodity Crop Productivity Index Land Class ................. 89

Figure 6.2. Distribution of acreage by the USLE soil-loss category (HEL land) ................................... 90

Figure 7.1. Spatial characteristics used in the Japanese SAPIM .......................................................... 104

Figure 7.2. Private and social optimal land allocation under heterogeneous land productivity:

Different cases .................................................................................................................... 105

Figure 7.3. Nitrogen response function of rice and wheat .................................................................... 110

Figure 7.4. One example of water and nitrogen balance of paddy field during crop period ................ 111

Figure 7.5. Shapes of estimated N runoff and purification function..................................................... 112

Figure 7.6. Analysis framework ........................................................................................................... 117

Figure 7.7. Private profits and social returns without production adjustment ...................................... 122

Figure C.1. The relationship between nitrogen application and yield for rice ...................................... 151

Figure C.2. Field data on N runoff and purification in paddy field ....................................................... 153

Figure C.3. N runoff and purification curve alternative estimation ...................................................... 153

Figure C.4. Estimated nitrogen runoff function form in upland field ................................................... 154

Figure C.5. The relationship between the amount of organic amendment application

and the size of conversion factor ........................................................................................ 157

Figure C.6. The relationship between the amount of manure application and the amount

of carbon sequestration ....................................................................................................... 161

EXECUTIVE SUMMARY – 9

LINKAGES BETWEEN AGRICULTURAL POLICIES AND ENVIRONMENTAL EFFECTS © OECD 2010

Executive Summary

Improving the environmental performance of agriculture is a high policy priority in

OECD countries. But determining the environmental impact of agricultural policies is

complicated because specific policy measures do not take place in isolation, but within a

broad and evolving socio-economic and technological context. Quantitative analysis

using models is not designed to exactly replicate the real world but can provide guidance

on the expected environmental outcomes, which could be particularly useful in assessing

the relative impacts of different policies. This can assist policy makers to better

understand the linkages between policy instruments and environmental impacts, and the

trade-offs or synergies involved, and therefore aid policy makers in the design and

implementation of cost-effective policies.

The key policy question is to identify the change in farmers’ actions that are due to

specific policy interventions, and then to determine the extent to which those actions

affect environmental quality. While the conceptual relationships are relatively well￾established, quantitative modelling is complicated for at least four reasons:

• Biophysical processes are complex and the relationship between a given practice

and its environmental outcomes is not always clear.

• Many of the environmental effects are site-specific, reflecting heterogeneous

agricultural and environmental conditions, and thus some impacts cannot be

extrapolated to the aggregate level through generalised policy-response

coefficients.

• There are in practice a mix of policy instruments applied and multiple

environmental impacts which make modelling particularly difficult.

• Many of the environmental impacts are not measured (or measurable) in monetary

terms. The same agricultural production practices may produce very different

bundles of commodity outputs and environmental externalities in different areas.

The conceptual and quantitative linkages between agricultural policies and

environmental impacts have been analysed using the Stylised Agri-environmental Policy

Impact Model (SAPIM). Developed by the OECD Secretariat, the SAPIM framework has

been applied to Finland, Japan, Switzerland and the United States. SAPIM uses a

combination of economic and biophysical models of representative farms (or production

units) in the case studies in the countries concerned.

The SAPIM approach is pragmatic – a farmer’s decision-making is analysed at the

field parcel level, because this level of detail is necessary to capture the complex

economic and biophysical interactions that are site-specific. SAPIM is specifically

designed to capture the environmental effects of different agricultural policies through

their impacts at the intensive margin (input-use intensity and production practices), the

extensive margin (land-use allocation between different agricultural activities) and the

entry-exit margin (land entering or leaving agriculture) under heterogeneous conditions.

10 – EXECUTIVE SUMMARY

LINKAGES BETWEEN AGRICULTURAL POLICIES AND ENVIRONMENTAL EFFECTS © OECD 2010

A number of standard policy instruments are explicitly modelled: nitrogen taxes, nitrogen

application standards, buffer strips, area payments and conservation auctions.

The Finnish study investigated how environmental regulations, environmental taxes

and voluntary agri-environmental payments perform in the case of crop production with

varying land productivity that implies different input-use intensities and adoption costs

with regard to agri-environmental measures. The effects of alternative policy instruments

on nutrient runoff and biodiversity were taken into account through their impact on input￾use and land-allocation choices. Conservation auctions – in which farmers bid for a

limited amount of conservation contracts – were also analysed.

The Swiss study examined a mixed dairy/crop farm, focusing on ammonia emissions,

greenhouse gases (GHGs) and nitrogen and phosphorus surpluses. Many of the standard

policy instruments on chemical fertilizer also have an impact on the amount of manure

applied on crops and therefore the amount of excess manure that is then exported outside

of the farm. Because nitrogen can be applied either as chemical fertilizer or as manure,

the nitrogen surplus needs to be addressed by policies that influence both sources of

nitrogen input.

The United States study focused on the economic and environmental performance of

conservation auctions compared to the more conventional agri-environmental policy

measures. Three alternative land-use types were analysed in this application – land

retirement for environmental purposes (riparian buffers) and two alternative tillage

methods to produce cultivated crops (no-till and conventional tillage). No-till and

conventional tillage represent important cropping management choices under the working

lands agri-environmental programmes. In this application the sources of heterogeneity

include both differential land productivity and environmental sensitivity of the land,

involving differing propensity for erosion and thus nutrient and sediment runoff.

In addition to the standard policy instruments, conservation auctions were analysed.

The application of a uniform pricing auction reveals farmers’ adoption costs and thus

their information rent is reduced and budgetary cost-effectiveness is increased. On the

other hand, a discriminatory payment gives farmers an incentive to place their bids above

their adoption costs: low adoption cost farmers have a greater incentive to do so than high

adoption cost farmers.

The Japanese study investigated the optimal land-use allocation and nitrogen

application under a representative Japanese farm that consists of rice paddies, upland

fields and land abandonment. This case study integrated paddy rice production with an

upland field crop (wheat) in the same analytical framework. In general, paddy fields can

provide either positive or negative environmental effects, depending on farm management

practices. Consequently, the incentives provided to farmers that encourage

environmentally friendly paddy rice production practices have a significant impact on the

environmental effects.

In each of the four case studies, the importance of the specific policy environment

was emphasised. In particular, the “policy package” is crucial as it defines the context and

therefore the assumptions that must be applied in order to have a realistic representation

of the impact of policies. Each of the case studies highlights different production systems,

environmental issues and policy contexts. The common thread underlying all of the case

studies is the impact of various policies under heterogeneous conditions. Specifically, all

of the case studies have an important crop production component, in which the impact of

fertilizer application is assessed in terms of crop yield and nutrient runoff. Social benefit

EXECUTIVE SUMMARY – 11

LINKAGES BETWEEN AGRICULTURAL POLICIES AND ENVIRONMENTAL EFFECTS © OECD 2010

analysis is adopted only in the Finnish and Japanese case studies, requiring monetary

valuation of environmental effects (although detailed methodological discussion on

monetary valuation is not conducted in this context).

In each case the analysis modelled alternative scenarios of policy options to

determine the production choices and environmental outcomes that would be optimum

from the perspective of producers and society (only in the Finnish and Japanese case

studies). The results highlight the well-established observation that when positive or

negative environmental externalities are not factored into farmers’ decisions then the

production choices and environmental outcomes will reflect the weighing-up of private

costs and revenues by farmers. Policy intervention can potentially raise social welfare

through bringing those externalities into the equation.

The analysis thus highlights the trade-offs involved – among production choices,

policy instruments, economic and environmental outcomes. The value of the SAPIM

approach is that a flexible framework has been developed that has the potential to be used

by the policy and research communities to analyse their specific interests.

The SAPIM approach, like any other modelling approach, is subject to limitations

with respect to the data, the model parameters, the economic and biophysical

relationships represented. In particular, the site-specificity of agri-environmental

relationships means that results cannot be readily generalised or attributed to more

aggregate levels. A key source of uncertainty is arguably related to the valuation

estimates of social benefits in the case studies. Nevertheless, the quantitative results in

this study arising from the various scenarios modelled can be viewed and interpreted as

illustrative.

The general policy lessons that can be drawn from the analysis are as follows:

• The heterogeneity of agricultural and environmental conditions makes it difficult

to generalise a particular policy response to beyond where it was modelled.

• Un-regulated polluting activities should be included in policy design.

• It is important to take into consideration the existing policy environment when

evaluating new policies.

• Environmental co-benefits and trade-offs should be recognised.

There has often been a lack of robust and quantitative analysis of the linkages

between policy drivers and environmental outcomes in the agricultural sector. Decisions

have been taken that have relied heavily on “trial and error” approaches to establish

“which policies work”. The approach described here is intended to redress the balance so

that observed changes – for example, in nutrient runoff, or greenhouse gas emissions, or

biodiversity associated with farming – can be better explained as to their cause and, in

particular, their link to policy. The SAPIM approach has the potential to provide policy

makers with a valuable tool to help them in designing and implementing effective and

efficient policies.

1. INTRODUCTION – 13

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Chapter 1

Introduction

Agriculture has been subject to considerable public intervention over the past half￾century, perhaps more than any other economic sector (Robinson, 1989; Gardner, 1990).

The provision of public support in the form of guaranteed output prices, input subsidies,

deficiency payments, crop area payments, or disaster relief has encouraged and facilitated

investment by farmers in production capacity expansion. While this has made it possible

to achieve, inter alia, national production objectives, it has also been accompanied by

more intensive soil tillage, increased reliance on agrochemicals, and expansion on

marginal cropland. Given its associated effects upon the quality of soil, water and wildlife

habitat, various authors have implicated agricultural policy as a contributing cause of

environmental degradation (Libby, 1985; Pierce, 1993; OECD, 1989; Lewandrowski

et al., 1997). Agricultural policies may also have positive effects on environment – for

example, agriculture-related semi-natural habitats and open landscape, flood and drought

control.

However, determining the environmental impact of agricultural policies is

complicated because the actions responding to a specific policy do not take place in

isolation, but within a broader and evolving socio-economic context. The first step in

measuring the environmental impact of agricultural policies is linking a change in

farmers’ behaviour to the policy being evaluated. Because many other factors influence

farmers’ choices, it is critical to determine the extent to which a given policy incentive

stimulated some farmers to do something that they would not otherwise have done.

A second step requires assessment of how the portion of observed behaviour that can be

linked back to a policy incentive then affects environmental quality – given that other

factors also affect the environment (Smith and Weinberg, 2004). Even without the

broader policy context, the complexity involved in assessing the environmental impacts

of agriculture is illustrated by Van der Werf and Petit (2002), who review 12 indicator￾based methods to evaluate environmental impacts at the farm level.

The more removed a policy instrument is from an observed environmental outcome

the more challenging it will be to assess the specific policy’s contribution to the outcome.

For example, the role of a conservation tillage incentive payment in an observed

reduction in soil erosion is likely to be easier to assess than the role of agricultural trade

liberalisation. An added difficulty in disentangling the role of policies in environmental

change is that many of the changes in farming that have led to environmental impacts

may be linked to technological developments driven by competition in agricultural

markets. The role of policy in influencing these trends is not always apparent.

Due to the difficulties in gathering empirical data and establishing policy

counterfactuals, it is often the case that an ex-ante assessment of policies is performed

using a combination of economic and biophysical models. Environmental process models

can help overcome the non-point source and site-specificity complications of agricultural

and agri-environmental programme evaluation by substituting predictions from models