Evaluation of agrienvironmental policies
Lecture 22.
Economics of Food Markets
Alan Matthews
What we want to learn
• The Rural Environment Protection
Scheme in Ireland as an example of an
agri-environment scheme
• Issues in evaluating an agri-environment
scheme
Irish government policies
• Nature conservation
– National Parks and Wildlife Service
– National Biodiversity Plan
• Agri-environment scheme
– Rural Environment Protection Scheme
Designated Habitats
• Natural Heritage Areas
– These are habitats of national importance. The legal basis on which
Natural Heritage Areas (NHAs) are selected and designated is the
Wildlife Amendment Act, 2000. There are approximately 1200 NHAs in
Ireland (750,000 ha) and are of huge importance to flora and fauna.
Examples include: Tullaghan Rock Bog (Roscommon), Cootehill Church
as a roosting place for Natterer's Bats (Cavan), Thomastown wet
grassland and woodland (Kilkenny).
• Special Areas of Conservation
– Special Areas of Conservation (SACs) are habitats of European
importance. Their legal basis is the EU Habitats Directive. There are
approximately 400 SACs in Ireland. SACs are important for flora and
fauna. Examples include: The Burren (Clare), Moyclare Bog
(Offaly),The Loughan Turlough (Kilkenny)
• Special Protection Areas
– Special Protection Areas (SPAs) are habitats of European importance.
Their legal basis is the European Bird Directive. They are of huge
importance to birds. There are approximately 100 in Ireland. Examples
include: Examples: Shannon Callows, Lough Oughter and associated
lakes (Cavan), Mullet / Blacksod Bay complex (Mayo)
Nature conservation
• Designated habitats now cover about
11.5% of farmland in Ireland
• NPWS Farm Plan Scheme
– pays farmers and landowners for losses
incurred through restrictions caused by the
designation of lands as an SAC or an SPA or
to pay for certain actions which are of benefit
to nature and are agreed in a farm plan.
– Directed towards farmers who do not wish to
be part of REPS
Facts about REPS in Ireland
• REPS 1 from 1994 – 1999
– over 45,500 farmers joined REPS
– approximately 33% of the utilisable agricultural area was farmed under
REPS guidelines;
– over €590 million was paid to farmers.
• REPS 2 from 2000 – 2006
– DAF target was 70,000 farmers
– Initially reduced uptake compared to REPS 1 – took until 2005 for
numbers to reach 45,000 again
– the number of REPS farmers can grow to 53,000 and over
– the projected expenditure is €1.9 billion.
• REPS 3 2004 – 2006
– Higher payments and more emphasis on biodiversity
– Expect to have over 50,000 participants in either REPS 2 or REPS 3 in
2006
REPS 1
• Introduced 1994 for five year
– First nation-wide scheme to encourage farmers to protect natural and
cultural heritage
• Farmers enter into a 5-year contract to farm in accordance
with an agri-environment plan drawn up by approved planner
• Maximum area for which payment is made is 40 ha, basic rate
of payment €160 per ha.
• Scheme has 11 measures directed towards controlling
nitrogen use and stocking rates, controlling waste and effluent
around the farmyard, protecting water quality, hedges and
archaeological or historical features on farm
• Extra payments for supplementary measures (organic
farming, rare breeds, public access, farming in designated
areas)
• Farmers must undergo a training course in agri-environmental
management
REPS 3
• Entered into force 2004. New scheme involves higher
payments and more emphasis on biodiversity. Farmers
two additional undertakings.
• One must come from seven Category 1 options. These
are the creation of a new habitat, hedgerow rejuvenation,
new hedgerow establishment, additional stone wall
maintenance, green cover establishment, environmental
management of setaside and increased arable margins.
• Nine further Category 2 options are traditional hay
meadows, species rich grassland, increased
watercourse margins, exclusion of access to
watercourses, tree planting, nature corridors, increased
archaeological buffer margins, management of publicly
accessible archaeological sites and landscaping
farmyards. Options chosen cannot be changed during
the course of the plan.
Evaluating REPS
• Additionality?
– Has land management changed as a result of participation in
REPS?
– Is there evidence of benefits? Importance of monitoring
• Deadweight?
– The extent to which scheme payments pay for outcomes that
would have happened in any case
– If management changes, the difference between what the
participant would be prepared to accept, and the level of
payment offered.
• Reversibility?
– The extent to which the benefits bought by a policy can be
reversed if the policy is removed.
• Administrative and transactions costs
REPS objectives
• 70% of farmers agreed REPS 1 was primarily an
income supplement and secondly and
environmental protection scheme. 60% of
planners agreed with this statement (An Taisce,
2002).
• OASIS categorises REPS under Income support
as sub-category under Employment
– “The Rural Environmental Protection Scheme (REPS)
is an income support scheme for farmers run by the
Department of Agriculture and Food.”
REPS 1 evaluation
• Highest uptake of scheme with drystock (esp. sheep)
and tillage farms, lowest uptake among intensive dairy
farms
• Larger farms under-represented
• 50% of participants come from six counties (Donegal,
Mayo, Roscommon, Galway, Clare and Cork)
• Match performance of REPS farms with non-REPS
intensive (> 170 kg per ha organic N) and non-REPS
extensive farms (< 170 kg limit)
• REPS farms had significantly increased investment
(pollution control and animal housing), but no impact on
total nitrogen and phosphorous output (Hynes and
Murphy, 2002)
Evaluating REPS
• Teagasc evidence that REPS farmers have
lower fertiliser use than non-REPS farmers
• Self-selection bias in evaluation
– If the scheme attracts extensive farmers to participate
in the first place because they have little to lose
through enrolment, then finding that participants have
lower fertiliser use than non-participants is not really
evidence that the scheme has succeeded
– Use of matched samples to try to control for initial
conditions. Hynes and Murphy (2002) compare
changes on REPS and non-REPS extensive farms
Carty, J., 2003, Teagasc REPS Conference
Carty, J., 2003, Teagasc REPS Conference
Hynes and Murphy, 2002 Department of Economics Working Paper No. 60, National University of Ireland Galway
UK and Northern Ireland
experience
• Two schemes
– Environmentally Sensitive Areas which are
concentrated areas
– Countryside Stewardship Scheme – national
coverage outside ESA
Countryside Stewardship Scheme
• Farmers are paid for conservation and public
access to countryside
• Each Stewardship agreement runs for 10 years
and is a unique package selected from a menu
of over 100 different possible items
• Scheme is competitive and not all applications
are successful
• All applications are assessed for their
environmental ‘added value’
• Standard payment rates
The future of REPS
• Aim was to increase participation to
70,000 farmers by 2006 – will reach just
over 50,000
• Very limited monitoring of environmental
data (An Taisce, 2002) – no physical
indicators collected
• REPS 4 now part of the 2007-2013 RDP
Tiered approach to environmental
payments
The future of REPS
• Under EU legislation, farmers can only be paid
for going beyond statutory norms in farm
management
• REPS farmers had to observe 170 kg/ha organic
N limit, compared to 210 kg/ha in draft Nitrates
Directive. But now this will be lowered to 170
kg/ha
– Example of Cavan bye-laws
• REPS was co-financed 75% by the EU and 25%
by the Irish Exchequer – over €200m annually.
• But Irish taxpayer must fund 50% of scheme in
future. EU funding comes out of the RDR
envelope – is it the best use of these funds?