REGULATION OF THE PROVISION OF PUBLIC GOODS FROM AGRICULTURE: ECONOMIC VALUE BASED MODEL

Bernardas Vaznonis

REGULATION OF THE PROVISION OF PUBLIC GOODS FROM AGRICULTURE: ECONOMIC VALUE BASED MODEL

The paper focuses on the provision of agricultural public goods and its economic regulation. Beyond supplying food and fiber, agricultural activity can also be instrumental in forming the landscape, providing natural resources, and preserving biodiversity. Fur-thermore, agriculture contributes to the achievement of societal goals such as the viability of rural areas and their development, food security, and preservation of cultural heritage. Agriculture may also have positive spill-over effects on other economic sectors such as tourism. Positive externalities of agriculture result in the emergence the said public goods, whereas intensive environmentally unbal-anced agricultural activity causes damage to the environment. The need of boosting the positive agricultural externalities, creating a provision system of agricultural public goods, and keeping under control the negative externalities can not be ignored.
In the context of the provision of public goods from agriculture, scientists encounter difficulties with evaluating those goods. No markets exist for them, it is not possible to exclude them from public consumption or to impose a tax on their use. Moreover, valua-tion problems result from a number of factors, namely: agricultural economic processes are coherent with biological processes, pro-duction proceeds on a large territory, etc. When the demand and supply conditions of agricultural public goods are unknown, prob-lems with estimating their value and importance readily occur. No volume of similarly provided public goods can be defined as op-timal with regard to a society. The absence of scientifically reasoned methodological principles or a specific valuation methodology for agricultural public goods prevents from rationalizing the economic regulation of the provision of public goods from agriculture and securing the quantities of agricultural public goods required by the consumers.
To ensure economically grounded volumes of agricultural public goods, it is essential to develop an efficient economic regulation system for the provision of public goods and to produce an economic value based model of the regulation of agricultural public goods provision.

Key words: agriculture, externalities, public goods, regulation, economic value.

JEL codes: D61, D62, Q51, Q58.

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