Wildlife and landscape services production in Dutch dairy farming; jointness and transaction costs

This paper investigates the joint production of milk and ‘wildlife and landscape services’ on Dutch dairy farms using a micro-econometric profit model of individual farm behaviour. Results show that milk, and wildlife and landscape services, are substitutes. Moreover, there are economies of scope for only relatively few farms. Both results imply that most farms would prefer specialising instead of jointly producing milk and wildlife and landscape services. Lower transaction costs increase wildlife and landscape services production by existing providers, and increase the number of farms producing wildlife and landscape services. The 2003 CAP reform has a negative effect on wildlife and landscape production because of the milk quota increase.