Optimal provision of public goods : implications for support to agriculture

Abstract

This paper summarises a decade of research by the authors into the welfare economic foundations for agricultural policy. The main results are that the levels of support to agriculture in rich developed countries like Norway are way out of proportion with what could conceivably be defended by welfare theoretic arguments. However, the present debate on the multifunctional role of agriculture points to valid arguments for agricultural support. In terms of welfare economics these arguments are found in the links between agriculture and public goods like landscape amenities and food security. This paper offers a modest attempt to quantify the Pigouvian subsidies that could be derived from these arguments.