Agricultural support as a Pigouvian subsidy for landscape amenity benefits: revisiting European regional convergence. (30th March 2012)

• Record Type: Journal Article
• Authors: Bivand, Roger; Brunstad, Rolf Jens
• Is Part Of: International journal of foresight and innovation policy. Volume 8:Number 2/3(2012)
• Page Start: 189
• Page End: 209
• Publication Date: 2012-03-30
• Subjects: regional growth -- agricultural economics -- Pigouvian subsidies -- Europe; Knowledge management -- Periodicals; Strategic planning -- Decision making -- Periodicals; 658.401
• Languages: English
• ISSNs: 1740-2816

Abstract

European regional per capita income levels may be underestimated if the positive external effects of landscape amenity benefits are omitted. This may impact β -convergence models of regional growth. Agricultural support has been used as a conditioning variable in a number of studies of European regional growth. Without correction for a possible Pigouvian subsidy, we would expect a negative relationship between agricultural support and regional growth. If agricultural support is intended to act as a Pigouvian subsidy aiming at internalising landscape amenity benefit, we would expect to see upward shifts in coefficient values and possibly a sign change. Because landscape amenity benefits cannot be readily measured, we will be obliged to explore the parameter space of models including such a correction, in particular to see whether positive coefficient values for agricultural support can be found for representations of amenity benefit that harmonise with economic theory.