Multifunctional Agriculture and the Preservation of Environmental Benefits

Werner Hediger and Bernard Lehmann

Swiss Journal of Economics and Statistics (SJES), 2007, vol. 143, issue IV, pages 449-470

Abstract: We investigate environmental aspects of agriculture from a welfare economic perspective and show that both positive and negative effects exhibit the character of undepletable externalities. To internalise these externalities while taking equity concerns into account, we propose compensation of farmers and forest managers according to the marginal external benefit of their land and a combination of charges and subsidies to improve rural water quality. This is consistent with efficiency requirements, would not cause additional market distortions, and leave the property rights on the land with the farmers while assigning the right on clean air and water to the consumers.

Keywords: agriculture; externalities; land allocation; multifunctionality; property rights (search for similar items in EconPapers)
JEL-codes: D61 Q15 Q24 Q25 Q26 (search for similar items in EconPapers)

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