Amber to Green – Changing Colour in Agricultural Policy

A model of Norwegian agriculture is used to study impacts of and adjustments to a substantial change in agricultural policy involving land subsidies targeted towards amenity benefits and environmental services rather than production. Compared with earlier versions, the model has been improved with more flexible technologies that allow land to replace other factors of production, e.g., making yield a function of fertiliser and introducing cultural landscape technologies completely decoupled from food production (flowery meadows). The shift in policy opens for lower agricultural support and higher economic welfare, while keeping up the level of agricultural land with more variation, less intensity and more grazing animals. The main scenario suggests that the present level of farmland can be maintained with 46 and 59 per cent lower levels of capital and nitrogen fertiliser per unit of land. Agricultural support is nearly halved, while economic surplus increases with NOK 20,000 per ha (≈ €2,500).