A European Perspective
New Horizons in Environmental Economics series
Edited by Ekin Birol and Phoebe Koundouri
Chapter 4: Economic Valuation of Environmental Impacts in the Severely Disadvantaged Areas in England
Helen Johns, Nick Hanley, Sergio Colombo and Ece Özdemiroglu ˇ INTRODUCTION ‘Less Favoured Areas’ (LFAs) are areas where farmers receive compensatory allowances to make up for geographical factors resulting in higher agricultural production and transportation costs. The classiﬁcation was instigated at the EU level in 1975 (Council Directive 75/268/EEC), and usually applies to hilly or mountainous areas, as well as some islands. Payments are also intended to acknowledge the role farmers play in maintaining the landscape and rural communities. In England there are two grades of LFAs, comprising mostly of uplands: Disadvantaged Areas (DAs) and Severely Disadvantaged Areas (SDAs). LFA designation is primarily intended to support farming in these less accessible places, rather than being an environmental designation. SDAs are often remote hill-farming areas which would face particular diﬃculty in maintaining economic competitiveness without subsidy. In England they include the Pennines, Lake District, Yorkshire Dales, North York Moors, Peak District, parts of the English–Welsh border, Exmoor and Dartmoor.1 Disadvantaged Areas tend to be slightly less hilly areas on the fringes of SDAs. LFAs in England receive diﬀerent rates of payment under the Single Payment Scheme, and can also apply for Hill Farm Allowance (HFA) payments, worth in total about £27 million per annum, which have associated environmental conditions. This study was undertaken to feed into a revision of the HFA in 2005. The ultimate policy objective of the HFA revision is to reward sustainable land management and the provision of public beneﬁts associated with hill farming....
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