Abstract:
The relative importance the EU has given to the positive multifunctional benefits of agriculture in comparison with its negative environmental effects is likely to become a politically controversial issue in multilateral trade negotiations. A key to the resolution of the potential trade conflicts which may result from this debate would be the finding of criteria by which the genuineness and the relative importance of agri-environmental externalities can be assessed. This paper reviews the literature on the environmental impact of European agriculture. It shows that valuation studies have not yet been able to elicit the marginal social values of the environmental effects of agricultural production. This constrains the ability to analyse quantitatively the welfare effects of agricultural policies and to identify socially optimal levels of agri-environmental measures.
Published in Review of Agricultural Economics 29 (1): 87-102 (title: “The environmental impact of European farming: How legitimate are agri- environmental payments?”).
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