Counterfactual approach for assessing agri-environmental policy: The case of the Finnish water protection policy

This paper applies counterfactual approach to assess the impacts of agri-environmental programs. Counterfactual analysis evaluates policies answering questions: what would have happened if...? We develop a theoretical framework for counterfactual analysis based on the inter-linkages between the behaviour of agents and the response of environmental systems to the economic decisions. We apply our model to assess the performance of the Finnish Agri- Environmental Programme to reduce agricultural nutrient runoff to the Baltic Sea. Counterfactual analysis allows us to determine both the unit effectiveness of the measures included in the Programme and its preventive impact. We demonstrate that the Finnish Agri- Environmental Programme does not achieve its goals, because it fails to anticipate farmers’ responses to incentives created by the Common Agricultural Policy and the Agri-Environmental Programme itself. The social cost-benefit analysis of the Program shows negative net benefits: benefits from reduced nutrient loading are much lower than support payments.

Issue Date:
Feb 10 2011
Publication Type:
Conference Paper/ Presentation
Record Identifier:
PURL Identifier:
Total Pages:
JEL Codes:
Q5; H23; H43

 Record created 2017-04-01, last modified 2018-01-22

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