Modelling agricultural and environmental policy using a bio-economic approach

Date

1998

Author

Flichman, G.

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Environmental problems created through the intensive use of fertilisers and pesticides are very serious all over the world. From the technical perspective solutions exist, but without specific policies it is difficult to imagine that farmers will adopt them, since those solutions usually imply higher costs of production. The economic and environmental consequences of alternative agri-environmental policies will be presented here using a farm-level model. The first part of the paper presents the concept of environmental risk and the theoretical difficulties of treating this problem. While concentrating on the different techniques used, it is argued that an econometric approach is too far from the biological specificity to be used to evaluate different policies. A bio-economic model is therefore needed to understand more clearly the biological aspects of water pollution. An example will then illustrate the trenment of groundwater nitrate pollution in Europe. The results obtained from a research project, named POLEN, that was supported by the European Community will be used. This research is based on the joint application of a biophysical model and a mathematical programming model. Two alternative policies designed to reduce nitrate pollution are tested. The first one is a contractual approach: production plans using environment-friendly techniques are proposed to farmers, offering them compensation for income losses. The alternative is to place a tax on the input. We used the POLEN model with data from the "Vallees et Terrasses" (South-West France) region.

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http://www2.feas.metu.edu.tr/metusd/ojs/index.php/metusd
https://hdl.handle.net/11511/108324

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Department of Economics, Article