An environmental-economic framework to support multi-objective policy-making

</strong>Keywords: environmental accounting, environmental indicators, farming systems, sustainability, organic farming, ecological-economic modelling, spatial analysis, multi-objective policy-making, opportunity cost.<strong></strong>There is a growing awareness in present-day society of the potential of sustainable farming systems to enhance wildlife and the landscape and to decrease environmental harm caused by farming practices. EU commitment to integrate environmental considerations into agricultural political agenda has resulted in the adoption of environmental cross-compliance and agri-environment support schemes. Sustainability can only be achieved through multi-objective policy tools. Furthermore, more insight is needed into the environmental-economic tradeoffs of farming systems to direct policy interventions towards sustainable development of rural areas. The main objective of the present research is to provide an environmental-economic framework for the design and evaluation of agricultural policy schemes aimed at the operationalisation of sustainability in agricultural areas. The research involved designing and applying (1) an environmental accounting information system (EAIS), and (2) an integrated ecological-economic model to evaluate sustainability of farming systems. First, the EAIS together with a set of economic indicators was applied to three case study farms representing organic, integrated and conventional farming systems. Results showed that organic farming systems have the potential to improve the efficiency of many environmental indicators in addition to being remunerative. Environmental performances of all farming systems analysed were consistently affected by pedo-climatic factors on a regional as well as on a site scale. Subsequently, the EAIS indicators were integrated with farm records from one of the case studies and were used as a data source for the construction of an integrated ecological-economic model. The model was first used to evaluate the impact of current (Agenda 2000) and previous (MacSharry reform) agro-environment regimes on sustainability of organic farming systems. Then, the model was used to analyse the impact of Agenda 2000 common market organisation and agri-environment schemes on conventional and organic farming systems. Results indicated that the level of sustainability achieved with organic farming was satisfactory under both the MacSharry reform and the Agenda 2000 regulations. Optimising the model under different policy scenarios confirmed that organic farming systems are environmentally more beneficial than conventional farming systems. Combining the model with sensitivity and scenario analyses enabled an evaluation of the opportunity costs incurred by farmers to supply environmental amenities. Finally, the use of such information to back policy decisions is discussed