ENVIRONMENTAL SUSTAINABLE VALUE IN AGRICULTURE REVISITED: HOW INVESTMENT SUBSIDIES FOSTER ECO-EFFICIENCY

Abstract

Many researchers and policy makers argue that CAP should support small farms mainly through environmental subsidies contributing by this mean to sustainable agriculture. This study offers a methodological contribution to the value-based sustainability approach, consisting of a computing indicator of environmental sustainable value (ESV). In this study, the authors have attempted to combine the value-oriented approach with DEA frontier benchmarking. In the next step, the authors test how investment subsidies contribute to ESV using a long-term panel of FADN region-representative farms in 2004-2015 with regards to other policy measures and factor endowments. The seminal within-between specification was employed to the control time variant and time in-variant space heterogeneity of European regions. The articles main finding is that higher investment support is beneficial for ESV. Other payments exert a negative effect on ESV besides the cross-sectional impact of environmental subsidies. When it comes to factor endowment influence, there is a positive impact of the capital-labor ratio and negative impact of the capital-land ratio.

Keywords

• sustainable agriculture
• Environmental Sustainable Value
• eco-efficiency
• agricultural policy
• CAP