Unintended consequences of environmental policies: the case of set-aside and agricultural intensification

Raja Chakir and Alban Thomas

Working Papers from HAL

Abstract: Set-aside policies providing agronomic and ecological benefits have been mainstream practices in European agriculture. Because they may lead to intensification on cultivated land, they can however have mixed environmental effects. To evaluate the indirect impact of a set-aside policy on crop intensification, we consider two elasticity indicators with respect to set-aside subsidy: chemical input demand and intensity of input use. We estimate a structural, multi-output micro-econometric model on a panel of French farmers from 2006 to 2010, accounting for multivariate selection on crops and land use (corner solutions). We estimate both a parametric and a more robust semi-nonparametric estimator, to detect deviations from normality and homoskedasticity. Our results show that a set-aside subsidy can provide farmers with incentives to intensify their production, leading to potential adverse environmental effects.

Keywords: set-aside; fertilizer and pesticide demand; corner solution; decoupling; land use (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-agr and nep-env
Note: View the original document on HAL open archive server: https://hal.science/hal-02482207v1
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Published in [University works] Inconnu. 2020, 38 p

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Working Paper: Unintended Consequences of Environmental Policies: the Case of Set-aside and Agricultural Intensification (2022)
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