Heterogeneity in compliance costs of agri-environmental measures

In Switzerland, farmer's compliance costs of participating in voluntary agri-environmental measures are supposed to be compensated by direct payments. Information about these compliance costs can inform policy makers about the effectiveness and efficiency of the corresponding policy scheme. In this study, we calculate average compliance costs based on full-cost accounting and Monte-Carlo simulation of payments for biodiversity conservation and landscape maintenance. Results show the heterogeneity of compliance costs for each scheme across production zones, farm structures and market environments. This heterogeneity implies that average cost calculations can hardly be com-pared with existing direct payment levels. In addition, the results show that compliance costs are highly influenced by the foregone income when switching from more intensive to less-intensive land-use regulated by the agri-environmental scheme. The importance of these opportunity costs imply that agri-environmental schemes must be carefully reconciled with other instruments in particular with respect to other direct payment schemes in Switzerland.