The expression “public goods” has been part of rural policy discourse for most of the last two decades. The core features of a public good (or service) are non-rival consumption (i.e. one person’s consumption does not affect that of another) and non-excludability (i.e. it is impossible, or extremely costly, to prevent consumption).
According to the Glossary of terms of the Common Agricultural Policy Public goods and services are: “Goods and services which benefit the general public but for which the producer is not remunerated through the market. Farmers provide a number of public goods, for example as regards the environment (by sound management of soil and water, maintenance of landscape features) and food security by ensuring an appropriate provision of supply”. Version in French: Biens et services publics.
In early 2009, the European Network for Rural Development established a special Thematic Working Group on public goods to consider the role and potential of rural development policy to deliver public goods associated with agriculture. The group looked specifically at environmental public goods and rural vitality, which were considered to be the main public goods addressed by the Rural Development Programmes. This working group organized a seminar on “Public goods and Public Intervention in Agriculture” in December 2010.
In December 2011 was launched a Focus Group on the Delivery of Environmental Services. The purpose of the group was to provide a set of recommendations on how to maximise the delivery of environmental services through agriculture, forestry, and rural areas in general and to offer a set of recommendations for the design and implementation of the future generation of Rural Development Programmes (2014-2020).
The Europe 2020 Strategy recognizes the importance of improving the delivery of environmental services as part of the wider challenge of moving towards a resource-efficient economy. This is reflected in the Common Agricultural Policy 2014-2020 which will provide support for public goods, meaning the reduction of greenhouse gas emissions and the promotion of biodiversity, landscape, and soil and water conservation. The greening payment is the most innovative element in the system for Direct Payments, and follows through on the Commission’s commitment to target Pillar 1 measures more closely to the delivery of environmental public goods. Furthermore, themes of “fostering innovation”, “contributing to climate change mitigation and adaptation” and “caring for the environment” are considered to be common goals for all Rural Development Programmes 2014-2020.
Beyond the Common Agricultural Policy reform, the objective of this EPRS Keysource is to show a selection of publications on public goods, either from the point of view of the agriculture and rural development or from a global point of view.
Overviews
Delivering Environmental Services using Rural Development Policy. European Network for Rural Development, April 2013. 36p. Version in French.
Rural Europe plays a central role in the provision of environmental services such as preserving biodiversity, contributing to climate regulation—by reducing emissions and sequestering carbon, protecting water quality and availability, preserving soil functionality and air quality, reinforcing resilience to flooding and/or fire and maintaining landscape values.
Coordination Committee Focus Group Delivery of Environmental Services: final report / Focus Group on Delivery of Environmental Services. European Network for Rural Development, December 2012. 53 p. Executive summary (February 2013. 5 p.). Annex 2 (January 2013. 27 p.) and Annex 3 (May 2012. 20 p.).
This report provides information on the approaches used within the Rural Development Programmes 2007-2013 for delivering environmental services, their main success factors and the lessons drawn for the design and implementation of the future generation of Rural Development Programmes 2014-2020.
Paying for international environmental public goods / Rodrigo Arriagada, Charles Perrings. The United Nations Environment Programme, October 2011.
This working paper identifies the issues associated with paying for international environmental public goods that are currently undersupplied. It identifies the conditions that need to be satisfied for supply of these public goods to be socially efficient, the reasons that they are currently undersupplied, and the policy options for addressing the problem. We conclude that diagnosis of the public goods failure associated with particular ecosystem services is critical to the development of the appropriate international response.
Public Goods and Rural Development / European Network for Rural Development. EU Rural Review, issue 7, March 2011. 68 p. Version in French.
This issue of the EU Rural Review shows the role of EU agriculture and rural development policies in the delivery of public goods in rural areas throughout Europe. Some topics analyzed are: the concept of public goods, the provision of environmental public goods through agriculture, the role of forestry, the socio-economic and cultural dimensions of public goods and some case studies.
Public goods and public intervention in agriculture. European Network for Rural Development, November 2010. 20 p. Version in French.
This brochure sets out to explain the concept of public goods and their relevance to European policy in the fields of agriculture and rural development.
Examples of measures providing public gods are: modernisation of agricultural holdings, improving and developing infrastructure,adding value to agricultural and forestry products, basic services for the economy and rural population, village renewal and development, encouragement of tourism activities and the conservation and upgrading of the rural heritage.
Public Goods and Public Intervention: final report / Thematic Working Group 3 – Public goods and public intervention. European Network for Rural Development, December 2010. 74 p.
The purpose of the report is to provide a detailed analysis y of the potential contribution of the Rural Development Programmes as a whole, and individual rural development measures in particular, to the provision of specific public goods in different regions of the European Union. The study focuses particularly on environmental public goods as a good illustration of how policy can deliver one important category of public goods.
Conceptual framework on public goods provided through agriculture in the EU / Thematic Working Group 3 – Public goods and public intervention. European Network for Rural Development, December 2010. 11 p.
The theoretical framework developed here affords insights into the characteristics of public goods, along with the most appropriate allocation mechanism needed to secure their supply in line with society demand. It concludes with an examination of the case for supporting the provision of public goods through some form of public expenditure programme. However, any policy conclusions drawn from these theoretical considerations must reflect the wide variety of natural, economic, structural and institutional conditions encountered in the countries and regions of Europe.
Analysis
European Parliament Publications
Environmental public goods in the new CAP: impact of greening proposals and possible alternatives / Alan Matthews. European Parliament, Directorate-General for Internal Policies, Policy Department B Structural and Cohesion Policies, March 2012. 100 p.
This note discusses the greening component of direct payments in the Commission’s legislative proposals of October 2011 for the Common Agricultural Policy in the period after 2014. Based on an analysis of their likely consequences it puts forward a range of options for the consideration of MEPs for how these proposals might be amended to improve their environmental impact, to reduce their administrative complexity and to improve their cost-effectiveness, including possible alternatives.
What tools for the European Agricultural Policy to encourage the provision of public goods? / Kaley Hart (et al.). European Parliament, Directorate-General for Internal Policies, Policy Department B Structural and Cohesion Policies, June 2011. 119 p. Version in French.
Agriculture plays an important role in the provision of a wide range of public goods in Europe, particularly regarding the environment and rural vitality. Appropriate policies are required to secure adequate provision in future. The Common Agricultural Policy potentially has a key role. This report examines some of the issues involved in reorienting the CAP for this purpose and proposes how it could be modified to contribute to the provision of public goods more effectively in the future.
Selected articles
Public goods as a source of rural development / Mariusz Maciejczak, Kyrill Zakharov. Proceedings of International Scientific Conference “Development prospects of rural areas lagging behind in the CEE region, May 2011. 16 p.
The purpose of this paper is to examine the concept of public goods as it applies to agriculture in the European Union and to find out if there is a case for policy measures to encourage the provision of public goods by agriculture. In particular the focus will be paid on which RDP measures are being used to deliver environmental and social public goods associated with agriculture.
Assessing the public goods provided by organic agriculture: lessons learned from practice / L. Smith (et al.). The Organic Research Center, October 2011. 4 p.
The role of farms as providers of public goods has long been recognised, and measuring performance in this area is of increasing interest to policy makers, in light of the approaching Common Agricultural Policy reform. The Organic Research Centre has been working on this topic in recent years, through the development of sustainability assessment tools. The latest outcome from this process is a ‘Public Goods’ assessment tool, developed through a Natural England funded project which aimed to evaluate the benefits accruing from organic management and entering into an Organic Entry Level Stewardship agreement. This paper describes the development of the Public Goods tool, and what has been learned in the process.
The Value of EU Agricultural Landscape / Pavel Ciaian and Sergio Gomez y Paloma. Agricultural & Applied Economics Association’s 2011 AAEA & NAREA Joint Annual Meeting, July 2011. 35 p.
The present paper provides a meta-analysis of agricultural landscape valuation studies and through the estimated benefit transfer function it projects the value of EU landscape. The analyses are based on information from more than thirty European and Non-European studies which use stated preference approach to uncover the society’s willingness to pay for landscape.
Demand for public environmental goods from agriculture: finding a common ground / Rico Hübner and Jochen Kantelhardt. 9th European IFSA Symposium, 2010. 10 p.
This paper draws on varied evidence to discuss the extent of public demand for goods and services provided by agriculture across Europe, with special emphasis on environmental services, such as landscape preservation and contributions to biodiversity. For this, a number of studies from European countries were analysed The results show that considerable differences exist to either the type of public goods as well as the levels of willingness to pay for the provision of public goods through agriculture.
CAP reform 2013 last chance to stop the decline of Europe’s High Nature Value farming? / G. Beaufoy and K. Marsden. European Forum on Nature Conservation and Pastoralism, 2010. 36 p.
This paper explores, from the point of view of European Forum on Nature Conservation and Pastoralism, BirdLife International, Butterfly Conservation Europe and WWF, how a targeted Pillar 1 scheme for High Nature Value Farming should work. The paper complements the NGO joint paper, specifically focusing on the High Nature Value Farming issue, the other schemes proposed in the joint paper are no less important for the sustainability of EU farming.
Selected reports
Feasibility Study on the Valuation of Public Goods and Externalities in EU Agriculture / Livia Madureira (et al.). Joint Research Centre, Institute for Prospective Technological Studies, September 2013. 286 p.
The main objective of this study is to develop and test an up-scaled non-market valuation framework to value changes in the provision level of the Public Goods and Externalities (PGaE) of EU agriculture from the demand-side (i.e. using valuation surveys). Its specific objectives are: the selection of the PGaE to be considered, to deliver a comprehensive description of the selected PGaE, to develop a methodology for the valuation of the PGaE of EU agriculture at the EU level, testing the valuation framework through a pilot valuation survey and to outline alternative sampling plans to the implementation of a large-scale valuation survey at the EU level.
Providing agri-environmental public goods through collective action. OECD, June 2013. 306 p.
This study analyses the promotion of collective action for agri-environmental public goods and addresses externalities by reviewing the experience of various OECD member countries. Twenty-five cases from 13 countries (Australia, Belgium, Canada, Finland, France, Germany, Italy, Japan, the Netherlands, New Zealand, Spain, Sweden and the United Kingdom) are examined. The study shows that collective action should be given serious consideration as a means of addressing many agricultural and natural resource issues, and in some cases collective action should be actively promoted.
Study on the role of agriculture as provisioning ecosystem service / Marta Pérez-Soba (et al.). Institute for Environment and Sustainability, Alterra Wageningen UR, Ecologic Institute, University of Copenhagen and EuroCARE, 2012. 103 p.
This study focuses on the agro-ecosystem provisioning services regarding food, feed, fibre and fuel. These services strongly respond to the socio-economic demands of human beings, but do not always consider the ecological demands of the ecosystem, i.e. the bio-physical structure and processes that take place during the agricultural production. Therefore there is no clear agreement within the policy and scientific communities on whether all types of agricultural production should be seen as a provisioning ecosystem service and if so, how the ecological-socio-economic flow linked to the provisioning service should be better assessed. This study makes an attempt to answer these questions by assessing quantitatively the degree of provisioning service by the agro-ecosystems by considering their energy balance and their different bio-physical structures and processes.
Farmers’ behavior and the provision of public goods: towards an analytical framework / R.A. Jongeneel, L. Ge. Wageningen, Statutory Research Tasks Unit for Nature & the Environment, August 2010. 68 p.
The new CAP reform aims to stimulate the role of agriculture as provider of public goods. An analytical framework is developed to model farmers’ decision making and to gain insight into farmers’ behavior in response to a number of policy instruments. The framework integrates characteristics of farm, farmer, market, as well as the policy instruments. Theoretical analysis suggests that attitudes, off-farm employment opportunities, non-pecuniary benefits and expectations of future developments can play important roles in farmer’s decision making regarding the provision of public goods. Empirical research is needed to test the hypothesis.
Provision of public goods through agriculture in the European Union / Tamsin Cooper, Kaley Hart, David Baldock. Institute for European Environmental Policy, December 2009. 396 p. Press release (25 January 2010).
The purpose of this report is to examine the concept of public goods as it applies to agriculture in Europe and to assess the role and importance of CAP measures in encouraging the provision of public goods by agriculture. The evidence draws on a wide range of sources, including scientific literature, evaluation studies, an in-depth analysis of the policy framework, along with detailed information collected from eight regional case studies conducted in the Czech Republic, France, Germany, Italy, Romania, Spain, Sweden, and the UK between April and July 2009.
Gestion des biens publics environnementaux. Réseau Wallon de Développement Rural, 2011. 53 p.
Cette publication collecte les actes du séminaire international “Gestion des biens publics environnementaux : quelles politiques mettre en oeuvre?” (Namur, 18 et 19 novembre 2010).
Public goods in a global context
The EU and global public goods challenges and opportunities / Mikaela Gavas. Danish Institute for International Studies, 2013. 36 p.
Over the last decade, development cooperation has evolved to such an extent that we are now entering ‘a new age of global development’, characterised by an emphasis on global public goods (GPGs). The increasingly global nature of development challenges clearly indicates that global problems require global solutions and new forms of international cooperation with the involvement of emerging and developing countries. The EU has the potential to play a leading role in the provision of GPGs. Although the EU has played a key role in the provision of GPGs, notably on climate policy and food security, it lacks a common strategy for addressing GPG challenges.
What’s in a concept? Global public goods, international law, and legitimacy / Daniel Bodansky. The European Journal of International Law Vol. 23 n° 3, 2012. 18 p.
Although the terminology of global public goods may be new to international law scholarship, many of the principal features and implications of global public goods are familiar: global public goods are externalities writ large; they create incentives to free ride; and in many cases, they require international governance to provide. Nevertheless, the global public goods literature has been valuable in highlighting that global public goods come in different types, with different ‘production technologies’. Some depend on the aggregate effort of the entire group, while others depend on a ‘single best effort’ or on the ‘weakest link’. These different types of global public goods raise different governance issues and hence different challenges for international law.
Multilevel governance of interdependent public goods: theories, rules and institutions for the central policy challenge in the 21st Century/ Ernst-Ulrich Petersmann (ed). European University Institute, 2012. 225 p. Summary of the main conclusions of the conference (11 pages).
This publication includes papers of an interdisciplinary conference in 2011 analysing multilevel governance problems of the international trading, environmental, development and rule-of-law systems as interdependent ‘aggregate public goods’. It begins with policy-oriented analyses from leading practitioners on the ‘gap between theory and practice’ in multilevel governance. The analyses of the ‘collective action problems’ are supplemented by case-studies on the world trading, environmental, development and related rule-of-law systems.
The Bio-Economy concept and knowledge base in a public goods and farmer perspective / Otto Schmid, Susanne Padel and Les Levidow. Bio-based and Applied Economics n° 1, 2012. 18 p.
This article analyzes that many farmers are not only commodity producers but also providers of quality food and managers of the eco-system. A public goods-oriented bio-economy emphasises agro-ecological methods, organic and low (external) input farming systems, ecosystem services, social innovation in multi-stakeholder collective practices and joint production of knowledge. The article also highlights the bio-economy concept should have a much broader scope than the dominant one in European Commission innovation policy. Socio-economic research is needed to inform strategies, pathways and stakeholder cooperation towards sustainability goals.
Public goods for economic development / edited by Olga Memedovic. United Nations Industrial Development Organization, 2008. 198 p.
Strong links between public goods provision and economic development make the case for the provision of public goods at national, regional and international levels. The provision of public goods is a key element of the quality of life and environmental sustainability. Their undersupply may affect prospects for economic development, threatening global economic stability, peace and prosperity. Mechanisms for the effective delivery of public goods and services should therefore be central to any poverty eradication strategy. Current views of economic development (macroeconomic stability, market-oriented reforms, good governance) need to be enriched and complemented by considerations of global public goods to achieve sustained high-quality economic growth and to ensure that growth translates effectively into poverty eradication.
Stakeholder views
NGOs
Agriculture et biens publics: poser les bases du débat / Chambres d’Agriculture de France, December 2010. 2 p.
In this short paper the Cambres d’Agriculture de France analyze the concept of public goods its payments and legal issues.
Contribution sur la notion de biens publics et sur la rémunération des services environnementaux fournis par les agriculteurs / Document de travail présenté par le WWF, la FNCIVAM1, la FNAB2 et la Fondation Nicolas Hulot, October 2009. 6 p.
This paper is a contribution that aims to stimulate debate in France about public goods.
Biens publics provenant des terres privées / dirigée par M. Allan Buckwell. Rural Investment Support for Europe, December 2009. 13 p.
This paper analyzes environment and cultural landscape services provide by land managers evidence (farmers and foresters). It is not just about the services actually offered, but also reviews the work on the range of non-market from our multifunctional land management services and evaluates different ways of delivering these services.
Court of Auditors
Is agri-environment support well designed and managed? / European Court of Auditors. Special report Number 7, 2011. 82 p.
In this report the Court recommends that: the Commission and the Member States should better clarify, justify and report on agri-environment sub-measures; the Commission should assess more rigorously key elements in rural development programmes before approving them; for the next programming period the Commission should consider whether:
- Agri- environment expenditure should be more precisely targeted;
- There should be a higher rate of EU contribution for sub-measures with a higher environmental potential;
- There should be a clear distinction between simple and more demanding agri-environment sub-measures;
- The Member States should be more proactive in managing agri-environment payments.
Case studies
Finland
Assessment of agri-environmental public goods provision using fuzzy synthetic evaluation / Chen Qiuzhen, Timo Sipilainen, John Sumelius. University of Helsinki, Department of Economics and Management, 2012. 23 p.
The paper assesses the provision level of agri-environmental public goods at the different regions in Finland by using fuzzy synthetic evaluation method. The evaluation results indicate that the Uusimaa region remains relative high provision level due to the low nitrogen and phosphate balance, low farm animal cattle and pig density, and relative high fallow area, on the other hand, the regions of Pohjanmaa and Etela-Pohjamaa lie in the relative low provision level. Therefore, we suggest that uneven area-based agri-environmental payment adopted would incentivize more agrienvironmental outcomes at the different regions.
Italy
Delivering public goods in agriculture: the cost of green payments for Italian farms / Concetta Cardillo … (et al.). European Association of Agricultural Economists, 126th Seminar, June 2012. 16 p.
The paper focuses on two of the greening obligations of the Common Agricultural Policy reform proposal: the diversification of crops and the establishment of the ecological focus areas. The paper, through FADN data, aims at quantifying the impact of these measures on the gross margin of farms specialized in arable crops in Italy.
Spain
Agricultura, desarrollo rural y sostenibilidad medioambiental / José Antonio Gómez-Limón, Andrés J. Picazo-Tadeo, Ernest Reig Martínez. CIRIEC-España, Revista de Economía Pública, Social y Cooperativa, núm. 61, agosto, 2008, pp. 103-126.
In addition to its traditional purpose of producing food and raw materials, agriculture plays an important role in terms of supplying public goods, generally in the form of externalities deriving from farming activities. These goods may be predominantly economic and social –rural development– or environmental –protection of biodiversity or landscape preservation. This study analyses the economic basis of agricultural multifunctionality associated with the joint production of private and public goods in farming and its implications in terms of economic policies. We also explain and assess the legislation –and its financing– that currently makes it possible to develop a multifunctional concept of farming in Spain. Finally, we present the results of recent research regarding the production of environmental goods by certain farming systems in Spain.
UK
Review of literature on the value of public goods from agriculture and the production impacts of the single farm payment scheme / Alistair McVittie, Dominic Moran and Steven Thomson. Rural Policy Centre, December 2009. 101 p.
This report provides an input to the inquiry into the future of support for agriculture in Scotland. It looks at the production impacts of the Single Farm Payment, and the public goods that are often associated with agriculture. The specific objectives of the study are to:
- Assess and establish estimates from the literature of the value of the main public goods such as landscapes and biodiversity specific to agriculture in Scotland;
- Identify gaps, limitations and future research needs in this area;
- Assess how different agricultural sectors across EU15 members states have responded to decoupling and introduction of the SFP with the 2003 CAP reforms; and
- Assess evidence on the impact of the SFP or decoupled payments on production in the arable, dairy, beef and sheep farm sectors and farm type.
Alternative payment approaches for non economic farming systems delivering environmental public goods / Barnes A.P. Scottish Natural Heritage, Scottish Environment Protection Agency, Countryside Council for Wales and Northern Ireland Environment Agency, May 2011. 96 p.
This report centres on the role of non-economic farming and the support for public goods through the available schemes and aims to assess the impact of these schemes and whether changes in payment mechanisms can both support non-economic farming systems and enhance the provision of public goods to society. There is, however, a difficulty in defining non-economic farming systems and hence the work involved developing a workable definition to apply to predominantly UK based farming types. The variability of incomes, due to fluctuating prices and seasonality effects, makes identification of these systems difficult and presents policy makers with a complex problem for assigning subsidy support schemes. Consequently, the first task is to present a robust and workable definition of non-economic farming, that can be applied to systems across the UK and suggest how this can be extended towards other peripheral farming systems within Europe.
Related legislative procedure(s)
Procedures completed, awaiting publication in Official Journal.
Proposal for a Regulation of the European Parliament and of the Council establishing a common organisation of the markets in agricultural products (Single CMO Regulation). COM(2011) 626 final/2, 19 October 2011. (Procedure file: 2011/281(COD)).
Proposal for a Regulation of the European Parliament and of the Council establishing rules for direct payments to farmers under support schemes within the framework of the Common Agricultural Policy. COM(2011) 625 final/2, 19 October 2011. (Procedure file:2011/0280(COD)).
Proposal for a Regulation of the European Parliament and of the Council on the financing, management and monitoring of the Common Agricultural Policy. COM(2011) 628 final/2, 19 October 2011.(Procedure file: 2011/0288(COD)).
Proposal for a Regulation of the European Parliament and of the Council on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) COM(2011) 627 final/2, 19 October 2011. (Procedure file: 2011/0282(COD)).
