Guidelines for Cost-effective Agri-environmental Policy Measures

image of Guidelines for Cost-effective Agri-environmental Policy Measures

Improving the environmental performance of agriculture is a high priority in OECD and many non-OECD countries. This will be of increasing concern in the future given the pressure to feed a growing world population with scarce land and water resources. Policy has an important role to play where markets for many of the environmental outcomes from agriculture are absent or poorly functioning.   

This study focuses on the design and implementation of environmental standards and regulations, taxes, payments and tradable permit schemes to address agri-environmental issues. It deals with the choice of policy instruments and the design of specific instruments, with the aim of identifying those that are most cost-effective in very different situations across OECD countries.  

Key conclusions from the study are that: there is no unique instrument that promises to achieve all agri-environmental policy goals; the cost effectiveness of payments systems could be improved by using performance-based measures; and policy mixes need to combine policy instruments that complement and not conflict with each other.

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The main authors of this study, which was prepared for the Joint Working Party on Agriculture and the Environment, were Jussi Lankoski and Andrea Cattaneo. The study draws on background papers prepared by consultants: Professor James Shortle (The Pennsylvania State University, United States) and Professor Richard Horan (Michigan State University, United States), who prepared a background paper dealing with policy design for environmental standards, environmental taxes and tradeable permits, and Dr Simon Mortimer and Dr John Finn, who prepared a background paper dealing with the Agri-environmental Footprint Index methodology for the evaluation of agri-environmental policies. The aim of the report is to provide policy makers with a set of tools for the design and implementation of cost-effective policy measures to address environmental issues in the agricultural sector.

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