Valuation of Environmental and Social Functions of the Multifunctional Cypriot Agriculture

The multifunctional farm sector in Cyprus poses threats on the island’s water resources, but also highly contributes to preserving the cultural identity, incomes and employment in rural areas. This paper presents an application of the Choice Experiment method, in order to evaluate these features of Cypriot agriculture, which are externalities, as farmers are not remunerated in markets for such services. The results of the empirical analysis demonstrate that the Cypriot public is in favor of a less intensive pattern of agriculture. Furthermore, Cypriots are willing to pay in order to mitigate adverse environmental effects of agriculture, to improve cultural heritage and to safeguard the continuation of farming trade on the island. The estimated benefits often exceed income losses from changes in the cropping pattern, which verifies that EU rural development policies are regarded as beneficial by the public.