REPLACEMENT OF PRICE SUPPORT MEASURES BY DIRECT PAYMENTS IN AGRICULTURAL POLICIES: DOES THIS BENEFIT THE ENVIRONMENT? THE EFFECTS OF THE POST-1992 CAP ON PEST CONTROL IN THE E.U.
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The objective of this research is to determine the contribution of recent agricultural policy reforms in the E.U. on the use of crop protection products. Specifically, we concentrate on the 1992 CAP reforms. Our theoretical model adopts the multi-output generalization of the Lichtenberg-Zilberman damage control technology model developed by Chambers and Lichtenberg. In the empirical application, farm-level data for a sample of French farms are utilized. Results suggest that price effects on the usage of crop protection products are always more elastic than the compensatory payment effects. This result indicates that a policy reform consisting of a reduction in price-support measures in favor of direct payments to farmers, such as the 1992 CAP reform, involves a certain degree of agricultural policy decoupling and may result in a reduction in the usage of crop protection products.