The EU has argued that some agricultural subsidies are needed to provide the optimal amount of externalities (both positive and negative) produced by agriculture. The argument is that agriculture is "multifunctional" and externalities such as rural development and landscape would be...

European Union (EU) agri-environmental programmes (AEPs) represent a significant step in the region's efforts to decouple agricultural output from production and export subsidies. While AEPs comprise only a small share of EU agricultural support, they have two possible external impacts: 1) the...