Climate, energy and environmental policies in agriculture: Simulating likely farmer responses in Southwest Germany

Agriculture in many industrialized countries is subject to a wide range of policy interventions that seek to achieve ambitious climate, energy and environment-related objectives. Increasing support for the generation of climate-friendly, renewable energy in agriculture, however, may lead to potential conflicts with agri-environmental policies aimed at land use extensification and landscape preservation. These potential trade-offs and inconsistencies in terms of policy implementation are not yet well understood, since conventional tools for agricultural economic assessment work on an aggregate regional level and do not fully capture the likely farmer responses when making a choice between investments in biogas production and participation in agri-environmental policy schemes. We employed a farm-level model to analyze the reaction of a heterogeneous farming population in Southwest Germany to the incentives set by the German Renewable Energy Act (EEG), on the one hand, and the agri-environmental policy scheme MEKA, on the other. Our simulations indicate a potentially large decrease of MEKA participation due to biogas production supported under EEG. The success of the 2012 EEG revision in reducing the ‘maizification’ of agricultural landscapes will critically depend on the local demand for biogas excess heat. In any case, the EEG revision does not alleviate conflicts between the expansion of renewable energy and environmental considerations, but rather shifts priorities from the former to the later: the simulated reductions of maize areas are achieved by a considerable reduction in overall biogas production (“output effect”), and not by encouraging less maize-intensive feedstock mixes (“substitution effect”).