Agriculture's 'multifunctionality' and the WTO

Abstract

Are the agricultural policy reforms embodied in the Uruguay Round consistent with meeting domestic policy objectives such as providing adequate food security, environmental protection and viability of rural areas? This article examines the claim that agriculture deserves more price support and import protection than other sectors because of the non-marketed externalities and public goods it produces jointly with marketable food and fibre (agriculture's so-called 'multifunctionality'). Do these unrewarded positive externalities exceed the negative externalities from farming by more than the net positive externalities produced by other sectors? To what extent are those farmer-produced spillovers under-supplied, and what are the most efficient ways to boost their production to the socially optimal levels? The article concludes that there is little trade-off required to meet domestic policy objectives on the one hand and agricultural protection reform objectives as embodied in WTO rules on the other.