A new mechanism based on landscape diversity for funding farmer subsidies

Agricultural intensification and farm abandonment in Europe have induced dramatic social, economic, and ecological issues. Sustainable management may solve these issues by providing a viable economic margin and preserving biodiversity. Specifically, we propose herein monetary compensation for farmers maintaining or restoring lands as non-agricultural areas. The mechanism for funding this compensation is based upon spatial analysis of two olive-grove landscapes. These exhibited different land-use patterns, a simple landscape and a complex one presenting a 50% higher diversity index and an 80% higher complexity index. We estimated olive-oil production and profitability. Results showed that the complex landscape contains three times more protected habitats. Neither landscape was economically viable, with the simple one showing values of 43% below the threshold, and the complex one 185%. The mechanism proposed to fund farmer subsidies was developed by means of the spatial and economic data estimated. This conservation payment system considers a non-linear relationship between the subsidies paid and the preserved area of agricultural use. The farmers of the simple landscape would receive a subsidy of 299, 394, and 464 €/ha for 10, 20, and 30% of preserved area, respectively. Inversely, the farmers of the complex landscape would be granted a reduction of 38 and 80 €/ha in their monetary incentives for the loss of 10 and 20%, respectively, of natural areas. Using this funding mechanism, conservation of biodiversity in agricultural areas would no longer constitute a factor limiting profitability, but would rather complement earnings.The present study was supported by the research project of the National Plan (R + D + i) of the Government of Spain (AGL2012-36537, PI: Sanz-Cañada, J.): local agro-food systems and public goods and analysis and valuation models of territorial externalities in designations of origin of olive oil (EXTERSIAL II). The authors would like to thank the valuable comments of the editor in chief and three anonymous referees and we also thank E. Warman, M. Ortega, and A. López-Pintor for their insightful observations on an earlier version of this pape