Linking Cross-Compliance And Agri-Environmental Schemes: A Case Study In Emilia Romagna

Agri-environmental schemes (AES) have been studied under different perspectives in Europe, since the beginning of the ‘90s. Under regulation 1698/2005, agri-environmental schemes design has been modified with a more clear identification of a baseline for identifying the commitments and the costs of these prescriptions. The link between cross-compliance and agri-environmental schemes can be interpreted as a problem of joint design by the decision maker. From the farmer’s point of view, private costs of participations in agri-environmental schemes shall be added to the cost to be compliant with the mandatory standard defined for each measure if they are not already implemented. This amount of costs arise when mandatory standard are required in the whole farm, even if agri-environmental schemes are applied in a small portion of the farm. The objectives of this paper is to investigate the farmer choice under different amounts of control and sanctions about the application to mandatory standards and about the commitments required by agri-environmental schemes, in conditions of moral hazard. A case study in an area of Emilia Romagna (Italy) has been developed. The simulations are referred to an agri-environmental scheme relative to input reductions use. The model offers useful insights about the mechanisms of compliance in agri-environmental schemes and their implications for the effects of policies in the case study area.