Evaluating Greening Farm Policies: A Structural Model for Assessing Agri-environmental Subsidies

This study uses a structural econometric model to evaluate the impacts of support from a European Union agri-environmental program designed to reduce nutrient pollution from agricultural land. Drawing on a representative sample of individual grain farms, we first quantify the effects of agri-environmental payments on farms’ decisions on land allocation and on fertilizer use. We then combine the predicted land allocation and fertilizer use with environmental production functions to quantify the impact on nutrient loading. Finally, we assess the monetary value of reduced nutrient pollution, drawing on a recent valuation study.