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Environmental Policy and Economic Instruments

Ensuring high environmental quality and providing natural resources are critical for human health and well-being. Economic tools and methods can bring important insights into how to use economic instruments to protect ecosystems and support sustainable resource use. The interaction of economic forces and environmental demands is a complex one and increasingly, there is a need to develop an institutional and regulatory framework which embraces both the private as well as public goals of natural resource management. We employ a variety of techniques to on the one hand investigate the effectiveness of economic instruments to address such problems as market and intervention failure.  On the other hand we explore aspects of human behaviour that will inform the development of effective economic instruments using experimental economics approaches.  To this end we apply theoretical models, empirical and experimental methods to several key problems including collective action dilemmas, biodiversity loss, climate change, conflicts over natural resource use and overfishing and pollution from agriculture and transport. Other examples include research on trust, cooperation and conflict, social capital, social and cultural norms with respect to local forms of governance.  A number of projects on this topic are described below.  Some of these focus on agri-environment schemes and pollution from agricultural landscapes. Other focus on climate change.

An ecological-economic analysis of agrobiodiversity and ecosystem services in managed landscapes in ireland

Farmers in the uplands manage their land mainly for livestock production.  In so doing however they also maintain some of the finest landscapes in Europe which serve as a repository for biodiversity at a local level.  Day to day decisions taken by farmers are affected by the policy and regulatory environment but also by the market.  This study investigates how environmental policies and market mechanisms affects the provision of ecosystem goods and services from upland farms in Ireland.  For more details follow the link.

Farmer participation in the rural environment protection scheme in Ireland

One of the most important agri-environment regulations (EEC) 2078/92) is implemented across many EU member states.  In Ireland, this measure is locally known as the Rural Environmental Protection Scheme (REPS).  Two studies by ENRE researchers looked at the uptake of the scheme by farmers in Ireland. One of these involved farmers who manage commonage (local commons in upland areas), the other was based on a National Farm Survey.  

Impact of nitrates directive on farm income in Ireland

One study investigates the impact of the nitrates directive on farm income in Ireland.  There is growing concern in many European countries about deteriorating water quality.  In Ireland data from the Environmental Protection Agency (1999) indicates that 22% of all serious pollution can be attributed to agriculture. In Ireland, and in most other EU countries, a command and control (CAC) approach rather than a system of economic incentives is used to control pollution. EU directives include the Drinking Water Directive (80/778/EEC), the Groundwater Directive (80/686/EEC), the Nitrates Directive (91/676/EEC) and agri-environment regulation 2078/92  known as the Rural Environment Protection Scheme (REPS) in Ireland. For more information follow the link.

A Spatial microsimulation analysis of methane emissions from Irish agriculture

The agricultural sector in Ireland is one of the single largets emitters of greenhouse gasses.  In the agricultural sector, members of ENRE have focused research activities on the contribution of the national herd to the levels of methane production and an examination, using cost-benefit methods, of policies that would reduce the emissions of these gasses.

Climate change policies in Ireland and Estonia

One of the areas of research in ENRE is the evaluation of the effectiveness of public fiscal policies in achieving pollution reduction objectives. Members of the unit are involved in a study that evaluates existing fiscal policies that aim to encourage the reduction of greenhouse gas emissions in Ireland and Estonia.  This evaluates the implementation of Pigouvian carbon taxes, particularly on the cost implications for different industrial sectors and on the redistributive impact of such taxation.  Microsimulation models such as the SMILE model developed by Cathal O Donoghue have been used to examine these issues.

Direct incentives for biodiversity and landscape conservation in the UK

Conventional approaches to biodiversity conservation typically aim to limit farming intensity and compensate farmers for production losses.  Instead one pilot study we conducted investigated an alternative approach to management agreements which involved the payment of direct incentives as a reward for biodiversity and landscape conservation.  Results of this scheme on the economics of sheep farming and grouse shooting in the UK on North York Moors National Park are encouraging.  The system is thought to be more cost effective at achieving biodiversity and landscape objectives than compensating farmers for income forgone.  In addition farmers are enthusiastic about the scheme and it helps strengthen cooperation between landowners and conservationists who share common goals.

An evaluation of agri-environment policy in Spain: the dehesa agro-ecosystem.

This project focussed on Spain's 2.25 million hectares of dehesa woodlands which are managed for livestock, fuel wood and charcoal production but are also of outstanding ornithological and landscape interest. However, in an attempt to raise farm profitability, farmers have increased the number of livestock grazing on their land in response to the European Union’s sheep meat regime and suckler cow payment scheme.  Concern regarding poor natural regeneration due to overgrazing of holm oak and cork oak ( Quercus spp) has led policy makers in Spain to question the impact of agri-environment schemes which directly support the livestock sector.

Incentives in sub-Saharan Africa

Finally, one project examined the impact of both direct and indirect incentives on the sustainable management of natural resources using case material from Africa (FAO 1999).  The study considered indirect incentives such as: financial profitability, government policies, international market conditions, institutional regimes and extension services. These contrast with direct incentives including direct subsidies, food for work, etc. Study findings show that indirect incentives have a significant impact on household decision-making and that this information has important implications for policy makers concerned with incentives and natural resource management (NRM).

Enre’s staff involved in these projects:

Cathal Buckley

Stephen Hynes

Breda Lally

Silja Lupsik

Eithne Murphy

Aksana Chzeuskaya

Cathal O’ Donoghue

Tom van Rensburg

Lava Yadav

Enre publications on environmental policy and economic instruments:

 

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