Public Goods in Agriculture

Mészáros, Dóra – Sipos, Balázs – Jancsovszka, Paulina – Balázs, Katalin

Keywords: categories of public goods, evaluation of public goods, externalities, market failure, multifunctionality in agriculture

Agricultural subsidies provided through the framework of the Common Agricultural Policy have a remarkable influence on farming activities which determine the quantity of public goods produced by agriculture. Recent studies argue that the social demand for public goods is undersupplied by agriculture. Investigating the ability of agriculture to provide public goods is therefore gaining increasing attention. In our article we give an overview of the definition of public goods, the types of environmental and social public goods provided by agriculture and the problems of their evaluation. The main problem is that these goods have no market and as a result of this they lack prices. One solution would be to create an artificial market for them by introducing environmental standards, environmental taxes, tradable permits and agri-environmental payments. To guarantee the optimal provision of public goods a combination of the above mentioned tools is needed. However, the pre-requisite of this is the development of reliable measurement methods for these goods.