Optimizing Agri-Environment Schemes for Cost-Effectiveness, Fairness or Both?

Abstract We investigate empirically trade-offs between improving the cost-effectiveness of an agri-environment scheme (AES) and its distributional impacts applying criteria equality (equal payments), equity producer surplus) Rawlsian maximin criterion (here understood as maximizing surplus in poorest region). Using ecological-economic modelling procedure we simulate existing grassland AES Saxony, Germany design two cost-effective alternatives—one with spatially homogeneous payments one regionally differentiated payments—and compare three schemes. For find a trade-off but not Rawlsian’ criterion. This suggests that improvements do necessarily go against concerns. However, substantial which can be achieved come at expense setbacks according to all applied fairness criteria.