Economic feasibility of environment-friendly farmland use policy for water quality improvement

Hyun No Kim

Article ID: 7692
Vol 8, Issue 9, 2024

VIEWS - 85 (Abstract) 43 (PDF)

Abstract


This study examines the economic feasibility of the environment-friendly farmland use policy to improve water quality. Conventional highland farming, polluting the Han River basin in South Korea, can be converted into environment-friendly farming through land acquisition or application of pesticide-free or organic farming practices. We estimate the welfare measures of improvement in water quality and the costs of policy implementation for economic analysis. To estimate the economic benefit of improvement in water quality experienced by the residents residing in mid-and-downstream areas of the Han River, the choice experiment was employed with a pivot-style experimental design approach. In the empirical analysis, we converted the household perception for water quality grades into scientific water quality measures using Water Quality Standard to estimate the value of changes in water quality. To analyze the costs required to convert conventional highland farmlands into environment-friendly farmlands, we estimated the relevant cost of land acquisition and the subsidy necessary for farm income loss for organic agricultural practice. We find that the agri-environmental policy is economically viable, which suggests that converting conventional highland farming into environment-friendly farming would make the improvement in water quality visible.


Keywords


benefit-cost analysis; choice experiment; environment-friendly farmland; pivot-style experiment design; water quality

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DOI: https://doi.org/10.24294/jipd.v8i9.7692

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