Multifunctionality in Agriculture

Evaluating the degree of jointness, policy implications

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These proceedings examine the nature and strength of jointness between agricultural commodity production and non-commodity outputs from the perspective of three areas important to the agricultural sector: rural development, environmental externalities and food security. This workshop also examined whether the relationships among these non-commodity outputs were complementary or competing. Finally, the policy implications that could be derived from the findings of this workshop were also a key element in the discussions and are summarised in the Rapporteur’s summary.



Different Types of Jointness in Production of Environmental Goods and Agricultural Policy Change

This paper analyses the effects on environmental good production by farmers of the transition from coupled direct payments to fully decoupled payments as proposed in the June 2003 CAP reform. Two types of environmental goods differing in their production relationships to agricultural commodities are considered: complementary goods and competing goods. Uncertainty, together with the farmers’ risk aversion, is likely to change the production neutral character of fully decoupled payments therefore we account explicitly for it. First, some general results are derived analytically. Then several case studies are carried out by means of mathematical programming farm-level models applied to the case of joint beef and biodiversity production in France and in the Czech Republic. Both the analytical and numerical results confirm that decoupling of direct payments is likely to have a positive effect on competing grassland biodiversity production but its effect will be negative if biodiversity production is complementary to beef production. The observed effects of uncertainty and risk aversion are negligible. The simulation results draw our attention to the fact that on the one hand, the type of jointness between agricultural commodities and environmental goods determines the effects of applied policy instruments on environmental good production, and that on the other hand, the type of jointness itself is to a certain extent determined by these policy instruments and their parameters, like the output price level or the degree of decoupling of direct payments.


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