Agricultural liberalization and the environment in Southern Europe: the role of the supply side

Abstract

The argument advanced by free market optimists that liberalized agricultural policies will lead to conservation, through reductions in outputs and environmentally damaging inputs, leaves many more things to be decided. Critics have pointed out that lower prices may induce farmers either to abandon land with loss of biodiversity and rural landscape ecology as a result, to increase production and pollution in order to sustain current revenues, or to switch to more environmentally damaging crops. This article follows a different route. It proposes that overall reductions in the total volume of agricultural output or the total amount of agro-chemicals used does not guarantee environmental enhancement. Environmental problems are usually location specific and crop specific. The cultivation of industrial crops is responsible for serious ecosystem offences in areas around the World. Thus, to actually have some measure of which way a lower price regime would be going in terms of conservation, we need to study the effects of either technology shifts or production shifts. Looking at cotton, maize and sugar beet supply response in two Southern EU countries, under given production technologies, it concludes that price reductions will lead to minimal if any reductions in the supply of these crops. Thus, conservation efforts will need to assume explicit forms.