Social capital influence on best farm management option in the presence of agri-environmental schemes

Due to their voluntary nature, agri-environmental schemes adoption is a complex issue which cannot be explained by a sole construct. Farm technical characteristics not perfectly reflect the adoption decision and other factors must be taken into account. One factor which has not been extensively studied in this context is that of social capital. This paper extends the modelling of best farm management selection in the presence of agrienvironmental schemes to consider explicitly the role of social capital, investigating both its structural (connectedness) and cognitive (collective perception) dimensions. The theoretical model put forward distinguishes two types of costs associated with agri-environmental schemes sign-up, forgone profit and transaction costs. The former are affected by technical variables while the latter are explained by social capital. To test this hypothesis separate dichotomous choice adoption models are fitted and compared for two schemes implemented in Spain differing in asset specificity and intensity of change. The first model only considers technical variables while the second expands to take account of social capital. Results supports that technical aspects are not sufficient to explain the selection of best farm management plans and that the inclusion of social capital variables influences this decision through transaction costs. Comparing individual probabilities of adoption, social capital reinforces technical suitability in a majority of cases and can even foster adoption for farms not predicted to sign-up under technical variables alone. Nevertheless, additional efforts must be undertaken in awareness raising activities as over one third of farms declaring not knowing the existence of agri-environmental schemes are potential adopters. The cognitive dimension of social capital, which seems to be neglected in agrienvironmental policy implementation in Spain, is the challenge policy design must tackle if additional adoption rates are to be achieved