Agriculture and Public Goods

Abstract

The chapter describes the theoretical approach undertaken in the book to define and analyze public goods. This theoretical approach, rooted in institutional economics, is then applied to the relationship between agriculture and the associated public goods and externalities. Since the public goods provision through agriculture is strongly related to the concept of multifunctionality, the chapter also provides an overview of the different approaches to multifunctional agriculture as well as the type of analytical framework needed to address the public goods agenda in the EU policy context. This analysis shows how the different approaches in the notion of multifunctionality have different implications in terms of policy development and policy implementation. The chapter critically assesses the most conventional scientific formulations for approaching multifunctionality, based on neoclassical economics, by showing how this approach provides only partial and limited insights into possible trajectories of the public intervention in agriculture. Whilst the conventional approach has usually involved a narrow focus on the policy instruments needed to incentivize multifunctional activities at farm level, a ‘wider’ approach on multifunctionality, rooted in institutional economics, enables the exploration of innovative policy tools and institutional arrangements that may be effective in promoting a collective and territorial approach to public goods provision.