What can we learn from behavioural economics to design a better Common Agricultural Policy?

Common Agricutural Policy

The Common Agricutural Policy (CAP) is constantly evolving moving from market intervention instruments (e.g. price support) to decoupled measures (payments that do not depend on the quantity of agricultural production). In addition the current CAP aims to enhance the environmental performance of the EU agricultural sector and to ensure a more equitable distribution of support between farmers.

The European Commission has launched a broad consultation and an impact assessment to anticipate the needs for 'modernisation and simplification of the CAP'. Of course this CAP reform will depend on how much money is dedicated to agriculture in the new MFF (Multi Financial Framework) for the post-2020 period (including the new adjustments needed due to the Brexit).

The toolkit to evaluate the policies (including the CAP) in the European Commission includes: stakeholder consultation (results presented on 7th July), analytical models (micro-simulation, Computable Genera Equilibrium, econometric…), cost-benefit analysis and other methods like multi-criteria or LFA (Life Cycle Assessment). In this toolkit up to know the use of experimental economics is very rare.

However in the last few years it has been probed that policy making can greatly benefit from a better understanding of people’s behaviour as the assumption that people (farmers) are fully rational is unrealistic in some context and may explain the limited effectiveness of some policies.

In order to apply a more nuanced and evidence-based understanding of human behaviour into the policy-making process, the European Commission and other International institutions (OECD, World Bank) and national institutions (UK, The Netherlands, Germany, France and Denmark) have created department of behavioural insights.

These departments use experimental approaches that can be classified in four categories: discrete choice experiments (DCE), laboratory experiments, field experiments and randomised control trials (RCTs). The results of these experiments can be combined with non-experimental evaluation tools in order to have a more accurate assessment of the policies.

In the framework of the CAP, the use behavioural economics is promising in order to understand the behavioural drivers to better design the future Common Agricultural Policie(s) to come. One specific example will be to assess the drivers of uptake of voluntary measures like the agri-environmental schemes in order to increase the participation rate and at the same time assuring the achievement of the environmental results.

Bibliography

  • Colen, L., Gomez y Paloma, S., Latacz-Lohmann, U., Lefebvre, M., Preget, R., Thoyer, S (2016). How can economic experiments inform EU agricultural policy. . JRC Scientific and Policy Report. https://ec.europa.eu/jrc/en/publication/eur-scientific-and-technical-research-reports/how-can-economic-experiments-inform-eu-agricultural-policy
  • Van Bavel, R., Herrmann, B., Esposito. G.and Proestakis. A. (2013). Applying Behavioural Sciences to EU Policy making. JRC Scientific and Policy Report. http://ftp.jrc.es/EURdoc/JRC83284.pdf
María Espinosa

María Espinosa

Maria del Pilar Espinosa Goded. Profesora asociada. Ingeniera Agrónoma por la Universidad Politécnica de Madrid (UPM) (2002) y Doctora en Economía Agraria por la UPM (2009). Durante su doctorado ha visitado la Universidad de Gotemburgo, la Universidad de Newcastle y el INRA(Institut National de la Recherche Agronomique).-Rennes. Desde 2010 trabaja en la unidad de "Economics of Agriculture" en el Centro común de investigación de la Comisión Europea. Sus áreas de interés son la evaluación de la Política Agraria Común mediante programación matemática, así como la evaluación de la provisión de bienes públicos mediante experimentos de elección (choice experiments). Ha publicado varios artículos en revistas indexadas incluyendo Journal of Agricultural Economics, Land Use Policy, Ecological Economics. Una relación de los artículos se puede encontrar en https://scholar.google.es/citations?hl=en&user=Rn_kFSIAAAAJ&view_op=list_works

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