The economic efficiency of financial support of organic farming has been questioned by economists and policy makers. However little empirical research has been done in order to evaluate the economic performance of these payments. Thus, the aim of this project was to calculate the cost-effectiveness of organic farming support in achieving environmental policy targets compared to single agri-environmental measures.
The cost-effectiveness of agri-environmental measures can be understood as a function of policy uptake, environmental effects, and public expenditure. Taking the Swiss agricultural sector as an empirical case study, cost-effectiveness of organic farming support and other single agri-environmental measures were calculated. For this purpose, the sector-representative positive mathematical programming (PMP) model FARMIS was extended by three modules encompassing a) life cycle assessments for fossil energy use, biodiversity and eutrophication according to the SALCA methodology, b) public expenditure, including policy-related transaction costs, and c) uptake of agri-environmental measures.
The calculations revealed a slightly higher abatement cost with organic farming support of 14 Swiss Francs per hectare for a 1 % average improvement in the environmental indicators, compared to a combination of three single agri-environmental measures (11 Swiss Francs per hectares), including both extensification of arable land and meadows. In view of an average public expenditure on agriculture of 2’500 Swiss Francs perhectare in Switzerland, these differences can be considered as marginal. Sensitivity analyses confirm that the cost-effectiveness of organic farming support is very similar to combined agri-environmental measures. Furthermore, the model revealed that the cost-effectiveness of specific agri-environmental measures is higher when implemented on organic farms rather than on non-organic farms.
