Files
Abstract
Targeted environmental policies for farmlands may improve the cost-efficiency of conservation
programs if one can identify those farms that produce public goods with the least cost. We derive
shadow values of producing crop diversity for a sample of Finnish conventional and organic crop
farms in the period 1994-2002 in order to examine their opportunity costs of conservation. Our
results of Data Envelopment Analysis show that there is variation in the shadow values between
farms and between the technologies adopted. The degree of cost heterogeneity and farms’ potential
for specialization in the production of environmental outputs determine whether voluntary programs
such as auctions for conservation payments are economically reasonable.