Résumé
Joint production of environmental goods and agricultural commodities, which depending on the farming system can be complementary or competing, and its policy implications are analysed here. The analytical approach is accompanied by numerical case studies implemented by means of mathematical programming models to grassland biodiversity production on suckler cow farms. Non-targeted policy instruments and their impact on environmental good production by risk-averse farmers are analysed and illustrated on case studies from Monts du Cantal, France. Obtained results suggest that coupled farm income support cannot be justified on environmental grounds because positive effects on production of complementary environmental goods will be cancelled out by negative effects on production of competing environmental goods. Environmental effects of decoupled support are negligible therefore decoupling represents an improvement with respect to production of competing environmental goods. However, more targeted instruments remain necessary. Implementation of targeted agri-environmental programmes is confronted with the problem of adverse selection leading to farmers overcompensation. This applies also if several environmental goods competing with each other for production factors are to be produced by the same farmer as analysed here on an example from White Carpathians, the Czech Republic. Contract differentiation as proposed by the principal-agent theory can increase cost-effectiveness of part-of-the-farm programmes, especially if strong negative jointness between environmental goods is present. Contract differentiation is not necessary with whole farm programmes; they can be based on uniform payments. Such whole farm programmes may be in absolute terms less expensive than part-of-the-farm programmes. ‘Demand more to pay less!’ phenomenon appears.