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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Summary and good policy practices

Improving the environmental performance of agriculture is a high priority in OECD countries. Specific policy measures designed to address environmental issues in the agricultural sector are relatively recent, but are becoming more widespread. These measures vary considerably across and even within countries, reflecting the severity of environmental stress, the potential for providing ecosystem services, and historical and cultural developments that influence policy priorities. Such measures do not operate in a vacuum: they are implemented alongside agricultural income support policies and economy-wide environmental policies, in a wider socioeconomic and technological context. Moreover, possibilities to create markets or quasi-markets are constantly evolving – which are closely linked to property rights – and thus alter the need, focus and type of policy intervention.

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