Multifunctional Agriculture Implications for Policy Design

Abstract

Multifunctionality is a systems oriented concept. It addresses the fact that in addition to the provision of private goods like food and fiber, agriculture also provides a set of public goods. The most central public good elements are: ù\tLandscape values: biodiversity, cultural heritage, amenity value of the landscape, recreation/access, scientific/educational value.ù\tFood related aspects: food security, food safety and food quality.ù\tRural activity: rural settlement and economic activity.Moreover, agricultural production results in negative external effects, like nutrient runoff, erosion, and pollution from pesticide and herbicide use. These aspects also need to be considered when designing policies and determining the extent and type of agriculture.The linkages between agricultural production and public good attributes imply that the costs of providing the public goods may vary. Polices directed at changing the amount of some public goods provided by agriculture will therefore influence domestic commodity production, and thereby also trade patterns. These impacts will, however, vary between policy instruments. Policies with the least impacts on commodity production may not correspond to the policy with the lowest social domestic costs, in particular when transactions costs are included.This raises the following issues that the international community needs to address:ù\tClarifying the rights structure, i.e., what are legitimate national concerns when policies to deal with these issues will influence trade patterns?ù\tWhat constitutes fair and equitable principles for balancing domestic provision levels of public goods vis-a-vis the need for transparent rules in international trade?