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Multi-function grasslands What part for the market and public policy?

Multi-function grasslands What part for the market and public policy?

Productions Animales 16(3): 175-182, Juillet

Unfavourable or no incentives at all make farmers use insufficient grassland areas, from the point of view of the society and economic efficiency. On the one hand the CAP premium encourages exploiting more crops and less grasslands than what real profit would imply. On the other hand, the farmer who seeks to maximise his profit does not consider the effects external to the market due to the lack of incentives. The market could, however, contribute to the provision of grasslands the society needs, because milk and meat produced by grass-feeding have specific characteristics valued by the consumer. Nevertheless, the public good characteristics of grasslands make market failures remain and public policy becomes necessary. The conception of efficient policies for grassland multifunctionality requires the survey of transaction costs and jointness between breeding and grassland. The different kinds of grassland premium probably allow to make environmental benefits without excessively increasing the transaction costs in comparison to price support.

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