AGRI-ENVIRONMENTAL PROGRAM DESIGN UNDER MULTIPLE POLICY OBJECTIVES

The UN projects that by 2050 the world's population be over 9 billion, compared to less than 7 billion currently, an increase of roughly one-third. FAO projections indicate that global average demand per person for meat will increase more than 20% between 2006-08 and 2050, due primarily to economic growth in emerging market countries such as China and India. This growth in population and demand per person will place increased pressure on agriculture to supply food and raw materials, on the natural resources used by agriculture, and on environmental quality. There is likely to be increased interest in the development of agri-environmental programs that attempt to balance the desire for abundant food supplies and reasonable food prices against the desire to preserve natural resources and the environment. Current agri-environmental programs in the U.S. and several other countries are mostly voluntary programs in which farmers receive financial and technical assistance from the government to adopt certain practices. Current programs often pursue a range of objectives and significant trade-offs may be involved in attempting to achieve these. For a voluntary program to be efficient, it must enroll farmers who can improve environmental quality at least cost. This is generally not the case. Whether a farmer participates and what practices are adopted are the result of a private decision calculus based on perceived private benefits, not environmental outcomes. The result is that adoption of measures for improving environmental quality is limited to farmers and practices for which the combination of private benefits and government payments is large enough to make adoption economically beneficial. With federal and state governments facing significant fiscal pressure, research is needed on the design of agri-environmental policies that can achieve environmental objectives at the lowest possible cost. Simultaneously there is a need to adapt programs to achieve improvements for a range of environmental outcomes given the pressure to increase agricultural productivity to meet the growing demand for food, fiber and renewable energy. This project will analyze decision-making by agricultural producers to existing and alternative possible policies designed to achieve agri-environmental, and the economic efficiency and cost-effectiveness of these policies.