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The impact of agri-environment schemes on farm productivity: a DID-matching approach

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  • Philipp Mennig
  • Johannes Sauer

Abstract

According to WTO standards, agri-environmental schemes (AES) payments should distort neither trade nor production but instead only compensate for income forgone and costs incurred. At the same time, contract design shall give farmers enough flexibility to react to changing market and production conditions. We apply a difference-in-difference propensity score matching estimator to test if AES have an unintended effect on farm productivity. Our results suggest that schemes designed for arable land overcompensate farmers and thus do fail to comply with WTO rules. For dairy farms, we find that AES participation reduces farm productivity, implying that action-based scheme design not considering changing market and production situations might be too restrictive, potentially preventing farmers from participating.

Suggested Citation

  • Philipp Mennig & Johannes Sauer, 2020. "The impact of agri-environment schemes on farm productivity: a DID-matching approach," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 47(3), pages 1045-1093.
    • Handle: RePEc:oup:erevae:v:47:y:2020:i:3:p:1045-1093.
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    File URL: http://hdl.handle.net/10.1093/erae/jbz006
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    Citations

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    Cited by:

    1. Ait Sidhoum, Amer & Mennig, Philipp & Frick, Fabian, 2024. "Assessing the impact of agri-environmental payments on green productivity in Germany," Ecological Economics, Elsevier, vol. 219(C).
    2. Marie Lassalas & Sabine Duvaleix & Laure Latruffe, 2024. "The technical and economic effects of biodiversity standards on wheat production," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 51(2), pages 275-308.
    3. Amer Ait Sidhoum, 2023. "Measuring farm productivity under production uncertainty," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 67(4), pages 672-687, October.
    4. Michalek, Jerzy, 2022. "Environmental and farm impacts of the EU RDP agri-environmental measures: Evidence from Slovak regions," Land Use Policy, Elsevier, vol. 113(C).
    5. Meike Weltin & Silke Hüttel, 2023. "Sustainable Intensification Farming as an Enabler for Farm Eco-Efficiency?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 84(1), pages 315-342, January.
    6. Gerling, Charlotte & Drechsler, Martin & Keuler, Klaus & Sturm, Astrid & Wätzold, Frank, 2022. "Time to consider the timing of conservation measures: designing cost-effective agri-environment schemes under climate change," MPRA Paper 113877, University Library of Munich, Germany.
    7. Amorn Pochanasomboon & Witsanu Attavanich & Akaranant Kidsom, 2020. "Impacts of Land Ownership on the Economic Performance and Viability of Rice Farming in Thailand," Land, MDPI, vol. 9(3), pages 1-18, March.
    8. Kelemen, Eszter & Megyesi, Boldizsár & Matzdorf, Bettina & Andersen, Erling & van Bussel, Lenny G.J. & Dumortier, Myriam & Dutilly, Céline & García-Llorente, Marina & Hamon, Christine & LePage, Annabe, 2023. "The prospects of innovative agri-environmental contracts in the European policy context: Results from a Delphi study," Land Use Policy, Elsevier, vol. 131(C).
    9. Leonhardt, Heidi & Braito, Michael & Uehleke, Reinhard, 2021. "Who participates in agri-environmental schemes? A mixed-methods approach to investigate the role of farmer archetypes in scheme uptake and participation level," FORLand Working Papers 27 (2021), Humboldt University Berlin, DFG Research Unit 2569 FORLand "Agricultural Land Markets – Efficiency and Regulation".
    10. Amer Ait Sidhoum & Philipp Mennig & Johannes Sauer, 2023. "Do agri-environment measures help improve environmental and economic efficiency? Evidence from Bavarian dairy farmers," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 50(3), pages 918-953.
    11. Lassalas, Marie & Duvaleix, Sabine & Latruffe, Laure, 2021. "Stringency of environmental standards, yield, product quality and revenue: Evidence from French wheat production," 2021 Conference, August 17-31, 2021, Virtual 315184, International Association of Agricultural Economists.
    12. Bernini, Cristina & Galli, Federica, 2024. "Economic and Environmental Efficiency, Subsidies and Spatio-Temporal Effects in Agriculture," Ecological Economics, Elsevier, vol. 218(C).
    13. Takamasa Nishizawa & Sonja Kay & Johannes Schuler & Noëlle Klein & Felix Herzog & Joachim Aurbacher & Peter Zander, 2022. "Ecological–Economic Modelling of Traditional Agroforestry to Promote Farmland Biodiversity with Cost-Effective Payments," Sustainability, MDPI, vol. 14(9), pages 1-21, May.
    14. Heidi Leonhardt & Michael Braito & Reinhard Uehleke, 2022. "Combining the best of two methodological worlds? Integrating Q methodology-based farmer archetypes in a quantitative model of agri-environmental scheme uptake," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 39(1), pages 217-232, March.

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