Abstract
We provide a new approach for assessing the cost effectiveness of green payment schemes. We allow for complementary, supplementary and competitive relationships between agricultural production and non-marketed ecosystem services generation. Our theoretical model distinguishes three theoretical cases depending on the minimum level of the non-marketed ecosystem services. These cases are empirically investigated using a flexible transformation function and farm-level panel data from the UK. We find that the biophysical connections between the non-marketed ecosystem services and market activities have important implications for marginal costs.
| Original language | English |
|---|---|
| Pages (from-to) | 573-603 |
| Number of pages | 31 |
| Journal | European Review of Agricultural Economics |
| Volume | 40 |
| Issue number | 4 |
| DOIs | |
| State | Published - Sep 2013 |
| Externally published | Yes |
Keywords
- ecosystem services
- green payments
- non-separability
- policy evaluation
