Title: Agricultural support as a Pigouvian subsidy for landscape amenity benefits: revisiting European regional convergence

Authors: Roger Bivand; Rolf Jens Brunstad

Addresses: Economic Geography Section, Department of Economics, Norwegian School of Economics and Business Administration, Helleveien 30, N–5045 Bergen, Norway. ' Department of Economics, Norwegian School of Economics and Business Administration, Helleveien 30, N–5045 Bergen, Norway

Abstract: European regional per capita income levels may be underestimated if the positive external effects of landscape amenity benefits are omitted. This may impact ß-convergence models of regional growth. Agricultural support has been used as a conditioning variable in a number of studies of European regional growth. Without correction for a possible Pigouvian subsidy, we would expect a negative relationship between agricultural support and regional growth. If agricultural support is intended to act as a Pigouvian subsidy aiming at internalising landscape amenity benefit, we would expect to see upward shifts in coefficient values and possibly a sign change. Because landscape amenity benefits cannot be readily measured, we will be obliged to explore the parameter space of models including such a correction, in particular to see whether positive coefficient values for agricultural support can be found for representations of amenity benefit that harmonise with economic theory.

Keywords: regional growth; agricultural economics; Pigouvian subsidies; Europe; Arthur Pigou; agricultural support; landscape amenities; amenity benefits; regional convergence; per capita incomes; income levels; positive effects; external effects; beta-convergence models; negative relationships; coefficient values; sign change; parameter space; economic theories; foresight; innovation policies; agriculture; sustainability; sustainable development.

DOI: 10.1504/IJFIP.2012.046110

International Journal of Foresight and Innovation Policy, 2012 Vol.8 No.2/3, pp.189 - 209

Published online: 21 Nov 2014 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article