Agri-environmental schemes have been used for decades in the EU, and they serve to assess compensation measures for farmers associated with environmentally friendly farming practices. Several stakeholders are involved in the AES application, and they all have concerns with improving productivity, allocating inputs and outputs, and minimising the level of pollution.
In this work, a by-production approach is used to estimate the combined environmental and economic efficiency indexes. This approach takes into consideration both the value of dairy products, as a desirable output, and the farm-level nitrogen pollution, as a negative one. In this respect, the paper provides an analysis of the impact of AES on nitrogen pollution management but always considering the most cost-effective strategy for improving the competitiveness of the agricultural sector.
Bavarian agriculture is characterised by small-scale family farms and quite harsh natural conditions. It is therefore imperative that AES measures to improve the ecological framework do not affect the economic performance or the potential for development.
The empirical analysis conducted here relies upon scientific indexes evaluated on selected participating farms, compared to non-participating farms. Results suggest that on one hand AES do not seem to be successful in reducing nitrogen pollution level, and on the other hand economic efficiency is not altered. However, more complementary interventions are needed to enforce linkages between farmers, agri-environmental policy makers and insurance policies.
You can read more about Ait Sidhoums et al.‘s methodology on farm performance and the potential for future research here.