Farm Level Costs of Agri-environment Measures: The Impact of Entry Level Stewardship on Cereal Farm Incomes

Authors

  • Chihiro Udagawa,

  • Ian Hodge,

  • Mark Reader

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    • Chihiro Udagawa is a Research Associate in the Cambridge Centre for Housing and Planning Research. Ian Hodge is Professor of Rural Economy and Mark Reader is a Research Assistant in the Rural Business Unit, all in the Department of Land Economy, University of Cambridge. E-mail: idh3@cam.ac.uk for correspondence. We are grateful to Rural Business Research for financial support and to the referees for their comments. None of them bears responsibility for the contents of the paper.

Abstract

Applying a difference-in-difference approach with propensity score matching, we examine the impact of participation in the Entry Level Stewardship (ELS) scheme on cereal farm incomes in eastern England. We assess the extent to which impacts are related to a) the source of income affected – whether only from agricultural or total business income; b) the channel of the impact – through land use and/or labour input; and c) the level of impacts through time. In addition, we assess the appropriateness of the level of the ELS payment. We find that: a) entering the ELS scheme could negatively affect cereal farm incomes – in particular, the total business income; b) that negative impacts arise primarily in relation to the use of land resources; c) that impacts may diminish over a relatively short period of time; and d) that the ELS payment broadly compensates for losses without providing over compensation. Given the diminishing negative impact over time, the level of ELS payment might need to be reviewed in the longer term, although policy evaluation should consider the wider implications for efficiency of alternative payment levels. We also discuss some limitations of the approach and potential extensions.

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