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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.