A Systematic Analysis of Options for a Agri-Environmental Policy Mixes for Multifunctionality

Agri-environmental policy in the European Union and elsewhere is increasingly oriented to-wards multifunctionality, i.e. the provision of public goods and/or reduction of environmental externalities next to the production of food and materials. Agricultural and agri-environmental policy approaches vary substantially across countries. However, they have two things in common: first, their limited success in improving the environmental quality of agricultural landscapes; and second, their reliance on voluntary payment schemes as the primary agri- environmental policy instrument. In this paper, I explore the full spectrum of theoretically available agri-environmental policy instruments for multifunctionality in a systematic way to demonstrate which options could be available and under what conditions. For this purpose, I combine concepts from ecosystem service research, property rights economics and public good economics. I use a list of ecosystem services provided in agricultural landscapes as a starting point. I characterize the individual ecosystem services by means of policy-relevant properties: the balance between public and private benefits, scale of provision, scale of benefits, degree of diffusion and attributability, spatial heterogeneity of benefit potential, spatial heterogeneity of management requirements, reversibility and permanence. I then leverage these properties to assess how well different policy instruments are likely to work for addressing the identified list of ecosystem services. For that, I consider policy instruments belonging to two property rights logics – “beneficiary pays” and “polluter pays”. The result of the analysis is a conceptual overview of a potential policy mix to address multifunctionality in agricultural landscapes.