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Behavioral Economics of Agri-Environmental Policies

Modern agriculture is causing a wide range of environmental problems. By regulating the agricultural sector, human societies try to find a balance between enabling the production of food and public goods and preventing negative consequences for the environment. In the European Union this is mainly achieved through the Common Agricultural Policy (CAP). Since many of the environmental indicators are still showing negative trends, an ongoing evaluation and adaptation of the policy instruments included in the CAP is asked for. At the same time, the field of policy evaluation is more and more incorporating a behavioral economic perspective on human behavior, one that deviates from the homo oeconomicus model that has long dominated research in this area. This thesis presents a study on “Behavioral Economics of Agri-Environmental Policies” by combining themes from agricultural and environmental economics with methods and perspectives from behavioral and experimental economics. It thereby contributes to the emerging field of behavioral agricultural economics. Specifically, it aims to shed light on the behavioral drivers of pro-environmental decisions of farmers and how these insights can be used to evaluate and adapt the CAP. With a lab-in-the-field experiment with farmers from Lower Saxony in Germany, an influence of the framing of the farmers’ societal role, their self-identity, as well as control aversion and feelings of warm glow on farmers’ behavior was uncovered. From a policy perspective, the results of this thesis provide a case for the continued use of both mandatory and voluntary policy instruments. Furthermore, with a Principal Components and Cluster Analysis, a multi-facetted picture of different farmer selfidentities prevalent in the sample population was revealed. Based on a literature review, the thesis also provides an analysis of how behaviorally-informed interventions might increase the environmental performance of the CAP in the future.

This project has been successfully completed already.