Marketed outputs and non-marketed ecosystem services: the evaluation of marginal costs

Johannes Sauer and Ada Wossink

European Review of Agricultural Economics, 2013, vol. 40, issue 4, 573-603

Abstract: We provide a new approach for assessing the cost effectiveness of green payment schemes. We allow for complementary, supplementary and competitive relationships between agricultural production and non-marketed ecosystem services generation. Our theoretical model distinguishes three theoretical cases depending on the minimum level of the non-marketed ecosystem services. These cases are empirically investigated using a flexible transformation function and farm-level panel data from the UK. We find that the biophysical connections between the non-marketed ecosystem services and market activities have important implications for marginal costs. , Oxford University Press.

Date: 2013
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