Domestic and International Implications of Jointness for an Effective Multifunctional Agriculture

When agriculture is effectively multifunctional, the optimal policy is to provide society with an adequate level of non commodity output (NCO) at the lowest cost. Whether or not this policy affects the welfare of trading countries does not alter this definition of optimality from a national standpoint. For large trading countries, the terms of trade effects of domestic environmental policies on national welfare may alter the optimal levels of instruments (Krutilla, 1991; Peterson et al., 2002). In this case, the international dimension of environmental policies cannot be overlooked.