Efficient Supply of Cultural Landscape in a CGE Framework

It is often assumed that the agriculturalsector produces public goods or positive externalitiesthat benefit the domestic consumers, in addition to itsproduction of private goods. Efficient agriculturalsupport is consequently directed towards resolvingmarket failures caused by the existence of these publicgoods or externalities. We illustrate how this can beachieved in a Computable General Equilibrium modelfor one multifunctional aspect of agriculturalproduction, namely the production of culturallandscape. Using a public good modeling framework aspoint of departure, we develop supply- and willingnessto pay functions for cultural landscape. Governmentalagricultural support is adjusted to achieve efficientsupply of the public good. As an illustration we applyour framework using a general equilibrium model forNorway. We show that efficient supply of culturallandscape can be achieved even with a tremendousreduction in initial overall support of agriculturalproduction.