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Abstract
The paper applies a non-parametric propensity score matching approach to evaluate the effects of two
types of farm programs (agri-environment (AE) programs and the less favoured area (LFA) scheme)
on input use and farm output of individual farms in Germany. The analysis reveals a positive and
significant treatment effect of the LFA scheme for farm sales and the area under cultivation.
Participants in AE schemes are found to significantly increase the area under cultivation (in
particular grassland), resulting in a decrease of livestock densities. Furthermore, participation in AE
programs significantly reduced the purchase of farm chemicals (fertilizer, pesticide). We also find
substantial differences in the treatment effect between individual farms (heterogeneous treatment
effects). Farms which can generate the largest benefit from the program are most likely to participate.