Application of Agro-Environmental Programs in Emilia-Romagna Region

The recent regulation 1257/99/EC provides for the funding of new agro-environmental measures, representing the continuation of those introduced by the 1992 CAP reform. Past application of agro-environmental policies raised a large debate about the best way of carrying out the interventions. The definition of payment levels and the setting up of suitable monitoring procedures are two major issues on which a large degree of disagreement still remains.The objective of this study is the measurement of actual costs for implementing agro-environmental measures and the setting up and testing of a model for the quantification of optimal parameters for agro-environmental policies.The model is tested on a specific data set related to the application of non-productive measures included in regulation 2078/92/EC and continued in regulation 1257/99/EC in Emilia-Romagna (Italy).The results show large area for improving the efficiency of application. The work shows that quantifying the payment on the basis of the average compliance cost is not an obvious solution, and, on the contrary, it is normally unable to satisfy efficiency objectives. Instead, many instruments can improve efficiency. In particular, instruments in which payments are conditioned on environmental effects or are proportional to environmental improvements allow important savings for the public administration, through the concentration of participation on farms offering the cheapest environmental improvement. Among such instruments, the use of auctions for contracts appears to be particularly promising for future improvement of policy mechanisms.