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Abstract
This empirical study investigates the effects of different agri-environmental schemes on individual
producer behaviour. We consider the effects on production intensity, performance and structure for a
sample of UK cereal farms for the period 2000 to 2009 and use the policy examples of the
Environmental Stewardship Scheme (ESS) and the Nitrate Vulnerable Zones (NVZ). The econometric
methodology is based on a directional distance function framework as well as the application of
propensity score analysis by the use of matching estimators. We find that both schemes are effectively
influencing production behaviour at individual farm level. However, agri-environmental schemes show
only very minor effects on the technical and allocative efficiency of farms, hence, we can conclude that
farms enrolled in agri-environmental schemes are efficiently adjusting their production decisions given
the constraints by the respective scheme. Farms affected by these schemes indeed tend to become less
specialised and more diversified with respect to their production structure. A voluntary type agrienvironmental
scheme seems to signficantly influence producer behaviour at a far higher scale than a
non-voluntary agri-environmental scheme. The methodological novelty of this research lies in the use of
a sound production theory based multi-output multi-input approach to disentangle measures for
production performance and structure which are then used as indicators for the robust treatment effects’
analyses.