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.

English Also available in: French


Policy-mixes for the agri-environment

overview of design parameters

The OECD study on Instrument Mixes for Environmental Policy (2007d) provides a comprehensive treatment of the economic efficiency and environmental effectiveness of using an instrument-mix rather than a single policy instrument. The main arguments for using instrument-mixes are: i) many environmental issues are multifaceted so that not only the amount of emissions, but also where emissions take place and when they occur are relevant; ii) many instruments can mutually strengthen each other; and iii) sometimes instrument-mixes can also enhance enforcement and reduce policy related transaction costs. However, there are also reasons for restricting the number of instruments in the mix. For example, when several instruments are applied in the mix there could be danger that one instrument hampers flexibility to find low-cost solutions to a problem that another instrument could have offered if it had been implemented on its own. And there are cases where some of the instruments in a mix are redundant and only increase total PRTCs (OECD, 2007d).

English Also available in: French

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