How behavioural and experimental economics can contribute to agricultural policy with an application to agri-emissions pricing

ABSTRACT

In this paper, I discuss the role that behavioural and experimental economics can play in improving agricultural policymaking. I do so by considering the development of an agri-emissions pricing policy in NZ. International literature shows that profit, as well as a range of other factors such as social norms and identity, drive farmer behaviour. This is particularly true for adoption of sustainable technologies and practices. A better understanding of farmer behaviour provides potential for: (1) an increased understanding of the uncertainty around policy modelling; (2) an increase in the accuracy of policy modelling, particularly when emission prices are low; (3) potential for new policy tools. Experimental economics provides a powerful methodology to build behavioural understanding and test policy tools. I argue that a behavioural economics perspective can contribute to agricultural policy, but add a note of caution that the gains to modelling accuracy and improved policy design are not guaranteed.

KEYWORDS:

• Agricultural policy
• behaviour change
• climate change
• emissions pricing
• experimental economics

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 See also https://dpmc.govt.nz/our-programmes/policy-project/policy-methods-toolbox/behavioural-insights.

Additional information

Funding

Zack Dorner received funding from the Ministry for Primary Industries in 2022 to review modelling of the agriemissions pricing policy. He received funding in 2021-22 from Dairy NZ to co-supervise a Master's student. He also receives funding from a Ministry of Business, Innovation and Employment Endeavour project, looking at increasing pro-environmental actions on farms.