Multifunctionality of Agriculture: An Inquiry Into the Complementarity Between Landscape Preservation and Food Security

Figure 5. Incremental costs

→-IC(FS) : LP>=1

IC(LP) : FS>=1

5. Concluding remarks

Without agricultural support, the levels of agricultural public goods will fall short of the demand in
high cost countries like Norway, Finland, Iceland and Switzerland. However, as demonstrated in this
paper using Norway as a case, the current support and agricultural activity is far out of proportions
from a public goods perspective. The simulations show that at most 40% of the current support level
can be defended by the public good argument. Furthermore, the present support, stimulating high
production levels, is badly targeted at the public goods in question. Since agricultural land is a major
component of both food security and landscape preservation, thus giving rise to a high degree of cost
complementarities between the two public goods, it would be more efficient to support land extensive
production techniques, than production per se. Naturally, production and trade will also be affected by
support to sustain public goods, but, as illustrated by the simulations, to a far less extent.

Although, we believe the main conclusions are robust, it should be admitted that simulation
results in this area are uncertain. In general, it is difficulty to specify and measure multidimensional
public goods like landscape preservation and food security. Also, it is hard to reveal the corresponding
willingness to pay for such goods. A main contribution of this paper has been to give a modeling
approach to these problems.

Appendix

The model is a partial equilibrium model of the Norwegian agricultural sector. For given input costs and
demand functions, market clearing prices and quantities are computed. Prices of goods produced outside
the agricultural sector or abroad are taken as given. As the model assumes full mobility of labor and
capital, it must be interpreted as a long run model. A technical description of an earlier version of the
model is given in Brunstad et al. (1995b).

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