Bio-based and Applied Economics 13(2): 121-146, 2024 | e-ISSN 2280-6172 | DOI: 10.36253/bae-14214 Bio-based and Applied Economics BAE Copyright: © 2024 Huber, R., El Benni, N., & Finger, R. Open access, article published by Firenze University Press under CC-BY-4.0 License. Firenze University Press | www.fupress.com/bae Citation: Huber, R., El Benni, N., & Finger, R. (2024). Lessons learned and policy implications from 20 years of Swiss agricultural policy reforms: A review of policy evaluations. Bio- based and Applied Economics 13(2): 121-146. doi: 10.36253/bae-14214 Received: January 23, 2023 Accepted: November 20, 2023 Published: July 25, 2024 Data Availability Statement: All rel- evant data are within the paper and its Supporting Information files. Competing Interests: The Author(s) declare(s) no conflict of interest. Editor: Meri Raggi; Silvia Coderoni ORCID RH: 0000-0003-4545-456X NEB: 0000-0002-3379-2425 RF: 0000-0002-0634-5742 Lessons learned and policy implications from 20 years of Swiss agricultural policy reforms: A review of policy evaluations Robert Huber1,*, Nadja El Benni2, Robert Finger1 1 Agricultural Economics and Policy ETH Zürich, Switzerland 2 Federal Research Station Agroscope, Tänikon, Switzerland *Corresponding author. E-mail: rhuber@ethz.ch Abstract. Learning from the experiences of other countries can support efforts to improve agricultural policies. Switzerland provides an interesting case because its pol- icy is exceptionally targeted towards the establishment of sustainable production sys- tems. We describe the history and the current state of Swiss agricultural policy, review evaluations of policy reforms, summarise their impact and outline the lessons learned for policy developments in other countries. We discuss four implications: i) some goals have been met, albeit at a high cost, and so, increasing efficiency of policies is key; ii) there is a need for more coherence and coordination regarding the different policy pro- grammes (i.e. in the sense of a ‘food system policy’); iii) cross-compliance measures (i.e. minimum standards for receiving support) have an important leverage effect; and iv) policy differentiation (e.g. by spatial targeting) and increasing farmers’ discretion over how to achieve goals (e.g. by implementing results-based payments) are key for future policies. Keywords: agricultural policy, comparative studies, policy comparison, policy evalua- tion, agriculture and food policy, farm support. JEL codes: Q01, Q18, Q57. 1. INTRODUCTION Agricultural policies are essential in achieving a sustainable and resilient farming sector. Agricultural policy goals and instruments have high hetero- geneity across nations, which reflects the different historical developments of and fundamental differences in societal needs with regard to agricultural policies worldwide (Swinnen, 2018). Policy learning from the experiences of other countries provides an important entry point for improving agricultural policymaking. Switzerland, which is geographically situated in the heart of Europe but not part of the European Union or the European Common Agri- cultural Policy (CAP), provides an interesting case for policy learning. Agricultural policy in Switzerland is characterised by its strong govern- mental support. The producer support estimate for Swiss agriculture is about 50%, which implies that half of farmers’ gross receipts are based on public https://doi.org/10.36253/bae-14214 http://www.fupress.com/bae https://doi.org/10.36253/bae-14214 https://orcid.org/0000-0003-4545-456X https://orcid.org/0000-0002-3379-2425 https://orcid.org/0000-0002-0634-5742 mailto:rhuber@ethz.ch 122 Bio-based and Applied Economics 13(2): 121-146, 2024 | e-ISSN 2280-6172 | DOI: 10.36253/bae-14214 Robert Huber, Nadja El Benni, Robert Finger support (OECD, 2022). The total amount of govern- mental spending is approximately 4 billion Swiss francs (CHF)1 per year for about 50,000 farms and a total agri- cultural area of 1.04 million hectares (FOAG, 2022b). The total cost for taxpayers and consumers in 2022 amounts to roughly CHF130,000 per farm per year, or about CHF6000 per hectare of agricultural land per year. In addition, Swiss agricultural policy has been a forerunner in environmental and animal welfare pro- grammes. In 2022, about 40% of direct payments to Swiss farmers are targeted towards biodiversity conser- vation, landscape maintenance, sustainable production systems and animal welfare. Swiss agriculture’s high lev- el of support for environmental and animal welfare pro- grammes, and its unique policy interventions in Europe, provides a valuable example for policy learning. This is especially so, given the plans to improve environmental performance in the CAP (e.g. via the Farm to Fork strat- egy; (e.g., Schebesta & Candel, 2020) and by the UK as it tries to make its agricultural policies “greener” (e.g., Gravey, 2019). In this paper, we present and analyse the goals and instruments of Swiss agricultural policy. We also describe the historical development and implementation of the policy and outline its effectiveness by reviewing policy evaluations over the last 20 years. We discuss the lessons learned from Swiss agricultural policy to provide insight for other countries, including not only the posi- tive aspects that should be followed but also the negative ones that are better avoided. On this basis, we derive the implications of Swiss agricultural policy development that may have promise in other farming contexts and environments. The design and development of Swiss agricul- tural policy has previously only partly been described (e.g., Curry & Stucki, 1997; El Benni & Lehmann, 2010; Mann, 2003; Mann & Lanz, 2013; Schmid & Lehmann, 2000). In its latest review of Swiss agricultural policy, in 2015, the OECD focused on recommending how to develop further existing policies on a strategic level (OECD, 2015). Since then, no overview has been pro- vided of the most recent reform steps that aim to make Swiss agriculture more ecologically sustainable. Oth- er agricultural policy reviews and comparisons, such as those between the EU and the US (Baylis, Peplow, Rausser, & Simon, 2008; Blandford & Matthews, 2019) and between the CAP and individual countries, such as the UK after Brexit (e.g., Roederer-Rynning & Matthews, 2019), have provided insightful descriptions of ongoing policy changes. In this context, countries that want to 1 Numbers refer to the year 2021. In 2023 1 Swiss franc (CHF) equals ca. 1.05 euro and 1.11 US dollar. support more environment- and animal-friendly mul- tifunctional agricultural sectors can gain insights from the experiences drawn from Switzerland’s highly com- plex agricultural policy (e.g. 104 different direct payment measures are currently implemented), its specific policy programmes and their synergies and trade-offs. Our analysis presents and discusses the lessons learned from Swiss agricultural policy approaches and provides implications for potential agricultural poli- cy development in Switzerland and other (European) countries. Our contribution focuses on three aspects that extend the current literature on agricultural policy learning. First, we present details and experiences of a wide range of instruments within a multifunctional agricultural landscape and review a (almost) complete set of existing agricultural policy measures that have been applied. Such a comprehensive analysis provides a unique perspective on the fact that agricultural policy is more than the sum of its parts. Second, the recent shift in Swiss agricultural policy towards environmen- tal and animal welfare goals and tailored policy instru- ments may be exemplary for future European agricul- tural policy development (Schebesta & Candel, 2020).2 Despite such efforts, Switzerland is currently observing an increase in societal discourses that have revealed gaps between societal demand for what agricultural and food systems should deliver, especially in terms of environ- mental performance and animal welfare, and what the current policies allow them to reach (e.g. Huber & Fin- ger, 2019). It is likely that this is also emerging in other countries. Third, Switzerland covers a large gradient of natural environments, from Alpine regions to hilly land- scapes and highly productive plains, and thus represents an interesting case for analysing the potential of differ- entiated policy measures within an agricultural policy mix. The results from our analysis provide important entry points for the discussion of policy instruments and the transformation of food and agricultural policies not only for Switzerland but also for other countries. The remainder of this paper is structured as follows. We begin by describing the historical development of Swiss agricultural policy. In the second section, we pro- vide an overview of the current goals, programmes, and instruments of Swiss agricultural policy. In the third section, we provide an overview of the goals achieved from the different policies and discuss the effectiveness and efficiency of the various policy measures, based on a review of Swiss agricultural policy evaluations. We then synthesise the impact of the different policies, dis- 2 We do not provide an explicit comparison between Swiss agricultural policy and the CAP beyond a short description of their historic devel- opment (see the supplementary material) 123Lessons learned and policy implications from 20 years of Swiss agricultural policy reforms: A review of policy evaluations Bio-based and Applied Economics 13(2): 121-146, 2024 | e-ISSN 2280-6172 | DOI: 10.36253/bae-14214 cuss the lessons learned and present the implications for policy-making and potential learnings to other country- specific agricultural policies. 2. HISTORICAL DEVELOPMENT OF SWISS AGRICULTURAL POLICY TO DATE 2.1. Protective policies in the twentieth century Governmental regulation of the Swiss agricultural sector started at the beginning of the twentieth century. The evolution of a new “food regime” at the start of the previous century, when farmers were increasingly inte- grated into the industrialising world and dependent on trade as well as mechanical and chemical inputs (Tauger, 2020), had triggered various laws aiming to protect Swiss farmers from low producer prices due to imports, reduce their debt and maintain their production capabilities. After the world wars, a new constitutional article defined a liberal economic policy in Switzerland – albeit with the exception of the agricultural sector. This “exception- alism” provided a new legal basis for protective policies. The subsequent 35-year phase (1950–1985) was charac- terised by protective market regulations for grain, milk and sugar, during which Switzerland became the great- est supporter of agriculture worldwide (Huber & Fin- ger, 2019). The producer support estimate PSE – that is, the transfer from taxpayers and consumers to farmers – was at about 75% in the mid-1980s. This implies that three-quarters of agricultural gross receipts came from either market protection or other forms of price support (OECD, 2015). 2.2. The era of decoupling The flipside of this massive support until the begin- ning of the nineties was that the Swiss government spent almost CHF 2 billion to guarantee high farm-gate pric- es and sell production surpluses from domestic over- production on international markets, while increasing environmental awareness brought to light the severe environmental problems of this highly intensive pro- duction system. At the same time, the negotiations in the Uruguay round of the General Agreement on Tariffs and Trade, and the subsequent foundation of the World Trade Organization (WTO), placed additional pressure on Swiss border protection measures and level of support for producers. This domestic and international pressure led to a major change in Swiss agricultural policy in the 1990s as Switzerland adapted its federal constitution to public and international demands and income and price policies were decoupled. This decoupling was implement- ed in two successive reform steps. The first of these was in 1992, when Switzerland rejected economic integration with the European Union but decided to pursue a route of agricultural policy reform combined with bilateral agreements, especially with other European countries (El Benni & Lehmann, 2010). Price support was reduced, and decoupled direct payments were introduced for all farmers without geographical restrictions. In addition, farmers could voluntarily apply to a so-called integrated production programme,3 for which additional payments were provided (Finger & El Benni, 2013). With the next reform step, in 1999, price guarantees (e.g. for crops and milk) were abolished. Governmental spending was converted into direct payments, and tariff- rate quotas were introduced that complied with WTO rules. Direct payments were divided into general (lump- sum area payments) and ecological direct payments. To be eligible for these direct payments, cross-compliance meas- ures were introduced that guaranteed a minimum envi- ronmental and social standard across all farms. Farmers located in hilly and mountainous regions additionally received payments to compensate for unfavourable pro- duction conditions and thus maintained production and concurrent landscape maintenance in remote mountain areas. While the first reform step, in 1992, was legally based on two articles, 31a and 31b, newly introduced into agricultural law, the regulatory change in 1999 was based upon the new Article 104 of the federal constitution, which had been accepted in a public vote in 1996. Article 104 (see the box in the online supplementary material A) defined multifunctionality as the underlying justification for public support of agriculture (Hediger, 2006) and led to a stable political phase between 1999 and 2015. Decoupling shifted the financial burden for agricultural support from the consumer (via consumer prices) to the state, and thus the taxpayer (via tax money used for direct payments). Switzerland’s new constitu- tional article explicitly foresaw a periodic examination of the agricultural policy strategy. The annual federal budget for the agricultural sector, amounting to around CHF 4 billion (approximately 7% of total governmental spending) had to be approved every four years by the Swiss parliament. This recurrent review of the Swiss agricultural pol- icy led to four consequent reform steps named after the targeted years of the reforms (AP02, AP07, AP11 and 3 In addition, farmers founded the private food label organisation Inte- grated Production (IP Suisse) with the goal to align agricultural pro- duction with environmental principles such as farm nutrient balance, diversified crop rotation, soil protection and the targeted application of pesticides. 124 Bio-based and Applied Economics 13(2): 121-146, 2024 | e-ISSN 2280-6172 | DOI: 10.36253/bae-14214 Robert Huber, Nadja El Benni, Robert Finger AP14–17). Policy developments in this period were in line with the reform agenda, including various deregu- lation and liberalisation steps, e.g. the bilateral trade agreement on cheese with the EU and abolition of milk quotas (El Benni & Lehmann, 2010). During this time, the development of agricultural policy was dominated by the administration and the executive (Hirschi, Widmer, Briner, & Huber, 2013). Overall support and protection decreased slightly, and the producer support estimate amounted to about 50% in 2021, compared to around 18% in the European Union (see Figure 1). 2.3. Increasing societal pressure triggers more environmen- tal sustainability and animal welfare In Switzerland, citizens can influence public policy via plebiscites. Popular initiatives allow any citizen to launch a proposal to revise the Federal Constitution. In the period from 2016 to 2022, ten popular initiatives were launched that addressed agricultural policy issues, including food security, food sovereignty, speculation on foodstuffs, fair-trade and animal welfare and pesticides. As a result of these, two opposite societal concerns col- lided. On the one hand, farmers’ organisations wanted to re-introduce protective measures (e.g. stricter import restrictions, higher governmental market control); on the other, Swiss citizens criticised the fact that agricul- ture had not been meeting its environmental and ani- mal welfare goals. The increase in popular initiatives represented a shift from a government-driven process towards “grass-roots initiatives” that had been developed and articulated outside, or in addition to, the legislative and executive processes. This phenomenon revealed an increasing gap between societal demand and the poli- cies and plebiscites, which could be seen as a barometer of the changes in societal preferences for agriculture and related policies (Huber & Finger, 2019). While nine out of ten popular initiatives had been rejected by Swiss vot- ers, they still had a considerable impact on the devel- opment of Swiss agricultural policy by putting envi- ronmental issues at the top of the agenda (Finger, 2021; Schmidt, Mack, Möhring, Mann, & El Benni, 2019). The pressure led, for example, to the introduction of a new constitutional article (104a) in 2017 that evolved from a counter proposal to a popular initiative that extended the role of agricultural policy towards a more compre- hensive “food system policy”. Moreover, even though the latest reform process in Switzerland had been delayed (AP22+), the public pressure had still led to a strength- ening of agricultural laws on pesticide use and nitrogen policies. More precisely, from 2023 onwards, agricultur- Figure 1. Comparison of producer support estimates (PSE) between Switzerland and the EU. Data from OECD (2022). The different colours refer to the gradient of coupling between the policies and agricultural commodity output. The instruments represented in green are fully decoupled from agricultural production (e.g. a biodiversity conservation programme). Light green refers to support that is not linked to current output (e.g. area-based payments for landscape maintenance). Red refers to payments coupled to production (e.g. area-based pay- ments for a specific crop, such as sugar beet). Blue refers to support that is coupled to commodity outputs or input use. 125Lessons learned and policy implications from 20 years of Swiss agricultural policy reforms: A review of policy evaluations Bio-based and Applied Economics 13(2): 121-146, 2024 | e-ISSN 2280-6172 | DOI: 10.36253/bae-14214 al policy aims to reduce nitrogen and phosphorus sur- pluses by 20% until 2030, and the risks associated with the use of plant protection products should be halved by 2027 (FOAG, 2023).4 Swiss agricultural policy and the CAP have very similar roots and goals, and they developed on par with respect to the decoupling of income and price policies (see online supplementary information B). However, Swiss agricultural policies have on average gone further than those of the EU with respect to aspects of environ- mental and animal welfare (see e.g., Metz, Lieberherr, Schmucki, & Huber, 2020; Pe’er et al., 2014). The ques- tion is whether and how other countries could learn from the Swiss experience to better consider environ- mental challenges in agricultural policymaking (Alons, 2017; Pe’er et al., 2020). 4 These targets are, however, still discussed in the ongoing political pro- cess of the AP22+. 3. CURRENT PROGRAMMES AND INSTRU- MENTS IN SWISS AGRICULTURAL POLICY Swiss agricultural policy is a sectoral policy at the fed- eral level. The main regulations are concentrated within a few laws with little linkage either to each other or to cross- sectoral policy areas such as regional, environmental and climate policy (Figure 2). In the following, we summarise the overarching goals of Swiss agricultural policy and describe its interventional logic. We then present two key policy instruments of the agricultural law, namely direct payments, and market regulation. Details of the other pol- icy programmes in the agricultural law (that is structural support, input regulation and research and education) are presented in the online supplementary material C. 3.1. Policy goals and interventional logic The goals of the Swiss agricultural policy are derived from the federal constitution (see online supplementary Figure 2. Overview of Swiss agricultural policy, including major legal fundamental agricultural law, federal law on rural land, law on lease- hold, spatial planning law and environmental law (grey circles). Financial support to farmers is mainly provided through the agricultural law, whereas the other laws include command-and-control regulations. Major instrument categories within Swiss agricultural law are the direct payment system (green), input regulation (light green), research and consulting (dark green), market regulation and production (red) and structural support (blue). Icons reflect the major policy programmes in these areas. The numbers in CHF are monetary transfers from consumers and taxpayers to farmers per year, which have been stable since 2010. The figure has been adapted from Huber (2022). Please note that the bubbles are for illustrative purpose only and do not represent the (monetary) size of the respective law area. 126 Bio-based and Applied Economics 13(2): 121-146, 2024 | e-ISSN 2280-6172 | DOI: 10.36253/bae-14214 Robert Huber, Nadja El Benni, Robert Finger material A). There are two key elements: First, the arti- cle defines the multifunctional role of agriculture; that is, the agricultural sector should contribute towards a) the reliable provision of foodstuffs to the population, b) the conservation of natural resources and upkeep of the countryside and c) the decentralised population set- tlement of the country. This implies that the agricultur- al sector not only has a role as a producer of food but also as a steward of the environment and a key player in rural development. Second, the constitution states that these goals should be achieved by means of a sustain- able and market-orientated production policy. In princi- ple, this reflects the main intervention logic5 (see Figure 3) and the idea of decoupling income and price support in the agricultural sector; that is, market prices should be based on the principle of economic freedom, whereas the confederation can supplement incomes by means of direct subsidies. It is important to note, however, that market-orientated production does not imply fully lib- 5 An intervention logic links the objective that needs to be met with the policy options that exist. eralised and deregulated markets. To fulfil the goal of ensuring food supplies, Swiss agricultural policy directly and indirectly supports market prices, the competitive- ness of the agricultural sector and farm structures and rural infrastructure. Article 104 of the Federal Constitution also pre- defines four categories of instruments that should be used to achieve these goals (see Figure 3). These main policy categories are i) direct payments to support meth- ods of production that are specifically natural and ani- mal friendly; ii) market regulation to protect farm gate prices and declare the production origin and quality of foodstuffs; iii) structural support (i.e. the provision of investment aids and regulation of the consolidation of agricultural property holdings); and iv) input regulation to protect the environment, e.g. against the excessive use of fertilisers, pesticides and other inputs. The article also provides the basis to support agricultural research, coun- selling, and education, providing the basis of the Swiss agricultural knowledge system (Obrist, Moschitz, Home, & 2015). Finally, the article provides links to other impor- Figure 3. The basic intervention logic summarising the different and overlapping links between the policy goals, main instrument catego- ries, outputs, and indicators in the Swiss agricultural law. The goals of Article 104 are in green; the additional goals of Article 104a are in the white dashed box; instruments with higher impacts on production are in darker blue. Other laws as well as research and extension are depicted as basis or supporting categories. Sources for indicators and target values: ‡FOAG (2022a); +FOAG (2023); †FOAG, BLV, and BAFU (2023) *FC (2020) with reference to the year 2021. Please note that the bars and arrows are for illustrative purpose only and do not represent the (monetary) size of the respective instrument. Formulation of the goals are taken from the original translation of the Federal Constitution of the Swiss Confederation (admin.ch). http://admin.ch 127Lessons learned and policy implications from 20 years of Swiss agricultural policy reforms: A review of policy evaluations Bio-based and Applied Economics 13(2): 121-146, 2024 | e-ISSN 2280-6172 | DOI: 10.36253/bae-14214 tant laws, such as the Federal Law on Rural Land and Leasehold and the Environmental Law. The output indi- cators and the targets of the different policies are set out in various reports of the Federal Office for Agriculture (FOAG, 2022a) and/or the Federal Office for the Environ- ment (BAFU & BLW, 2016), although they are constantly debated and revised as part of political processes. Article 104a, which was introduced in 2017 through a public vote, strengthens the role of food security for- mulated in the original 104; that is, it states that the confederation should safeguard the basis for agricultur- al production by maintaining the extent of agricultural land and guarantee that food production is adapted to local conditions. In addition, the new article also speci- fies the role of trade in securing food availability by stat- ing that cross-border trade relations should contribute to the sustainable development of the agriculture and food sector. Finally, the article also states that food should be used in a way that conserves natural resources (related to food waste, as an important policy goal). The clear setting of the linkage between the objec- tives and instruments shows that Swiss agricultural policies are strongly anchored in the Federal Constitu- tion. The fact that the Swiss public can suggest directly amending the constitution by popular initiatives, and that this democratic tool has been increasingly used in recent years, means that the Swiss constitution can be seen as a “social contract” between the agricultural sector and the rest of the society (see e.g., Feindt et al., 2019). This brings a high level of legitimacy to the deci- sion-makers on Swiss agricultural policy. On the flip- side, the federal constitution is a reservoir of conflicting goals6 that have led to many practical trade-offs in the implementation of agricultural policy programmes and instruments, as well as their intended outcomes. This is also shown in the basic intervention logic (see Figure 3), illustrating the many overlapping links between the main objectives in the constitution and the four policy categories. 3.2. Direct payments At the heart of decoupling income and price poli- cies, as well as incentivising the uptake of more sus- tainable farming practices, is the substitution of price regulations with direct payments that remunerate farm- ers for their multifunctional role in society. The Swiss agricultural direct payment system has two conceptual pillars. First, payments are conditional on cross-compli- 6 Switzerland does not have a constitutional court, and conflicting arti- cles may be added to the constitution. ance measures. This implies that a farm is only eligible for direct payments if it fulfils minimum environmental requirements (in the so called “proof of ecological per- formance”) and those of individual farmers (e.g. age, education; see online supplementary material C1 for a detailed description of these standards). Second, the conceptual design of the current direct payment system is inspired by the so called Tinber- gen rule, which states that each individual instrument should address a single goal (Mann & Lanz, 2013). This implies that there exists a direct payment programme for each specific goal of Swiss agricultural policy, namely i) ensuring food supply, ii) the maintenance of cultural landscapes, iii) the promotion of landscape quality, iv) increasing resource efficiency, v) biodiversity conserva- tion and vi) the development of environmental- and ani- mal-friendly production systems. The conceptual align- ment of the Swiss direct payment programme with the Tinbergen rule aims to ensure that the schemes within the corresponding programme are well-targeted to agri- cultural policy goals (e.g., S. Wunder et al., 2018). An overview of these payment schemes, and their budgets can be found in Table 1. In addition to the targeting, each of the programmes may consist of different direct payment schemes and measures, which allows the corresponding direct pay- ments to be “tailored” to production regions, farm types or landscape elements, which should ensure the addi- tionality7 of the policy (e.g., Guerrero, 2021). For exam- ple, the development of a nature- and animal-friendly production system contains payments for organic farm- ing, crop production with restricted use of pesticides, animal welfare and reducing concentrated feed in milk and meat production. Each of these schemes, in turn, consists of different measures (i.e. payments tailored to crops or livestock units). Overall, the Swiss direct pay- ment system consists of 104 different payments.8 The design and legal development of direct pay- ments is driven by national authorities, while the responsibility for their administration (control, pay-out, cuts etc.) lies within the Swiss cantons. Thus, the subsid- iarity of Swiss agricultural policy is rather low. 3.3. Market Regulation Market regulations in Switzerland are based on the following four pillars: i) the regulation of imports, ii) the 7 Additionality implies that the direct payment improves environmental outcomes compared to the baseline (e.g., business as usual). 8 Note that these payments are often characterised by complex sub- structures and conditions, so the complexity is even higher than the 104 payment schemes. 128 Bio-based and Applied Economics 13(2): 121-146, 2024 | e-ISSN 2280-6172 | DOI: 10.36253/bae-14214 Robert Huber, Nadja El Benni, Robert Finger Table 1. Overview of direct payments in Swiss agriculture (as of 2022). Objective Payment for… No. of measures Measures tailored to… Design Budget (million CHF) Share (2021) Ensuring food supply Producing food on agricultural land 8 Production zones (decreasing with altitude); lower payments for areas under the biodiversity scheme; additional payment for crop rotation area Action-based scheme (payment per ha of agricultural land) 1078 39% Landscape maintenance Cultural landscapes 5 Production zones (increasing with altitude; zero for lowlands) Action-based scheme (payment per ha of agricultural land) 140 5% Steep slopes and very steep slopes 7 Different gradients of steepness (and specific payments for grapes) Action-based scheme (payment per ha of agricultural land) 149 5% Summering pastures 6 Specific animals (cattle v sheep) and differentiating between farms that send or receive animals for summering Action-based scheme (payment per livestock unit living 100 days on summering pastures) 239 9% Biodiversity conservation Areas that support biodiversity maintenance 17 Production zones and type of biodiversity element or measure (e.g. less intensively used grassland, flowering fallows, trees) Action-based scheme (payment per ha; elements like trees are converted on a ha basis) 159 6% Areas that support biodiversity of high quality 17 Production zones and biodiversity elements. No payments for measures on cropland Result-based scheme (payment per ha for a certain quality, i.e. minimal number of rare species found) 163 6% Agglomeration bonus 6 Production zones and biodiversity elements Collaborative payment scheme (payment per ha)* 113 4% Landscape quality Landscape quality 4 Project goals (i.e. ecological elements or land-use types) Collaborative payment scheme (payment per ha or livestock unit on summering pastures)* 147 5% Sustainable production systems Organic agriculture 3 Crops (vegetables and grapes, other crops and grassland) Action-based scheme (payment per ha) 67 2% Extensive production of cereals 1 - Action-based scheme for crop production without pesticides, except for herbicides (payment per ha) 36 1% Grassland-based milk and meat (GMF) 1 - Action-based scheme that restricts the concentrated use of roughage-consuming animals and the proportion of maize silage from arable land (payment per ha of grassland) 112 4% Animal-friendly housing systems 3 Animal type (pigs, poultry, cattle and sheep/goats) Action-based scheme (payment per livestock unit) 98 3% Animals under free-range production systems 7 Animal type Action-based scheme (payment per livestock unit) 198 7% Resource efficiency Agricultural practices 19 Agricultural practices (direct sowing, precision agriculture techniques, wash-up systems in pesticide applications, reduced nitrogen in feed for pigs) Action-based scheme (payment per ha or livestock unit) 43 2% Total 104 2’732 100% *Farmers receive a bonus payment on top of the action-based payment if they designate land for conservation that is in close proximity to neighbours’ conservation areas. Eligibility depends on the project (defined by farmers, cantons, farm advisors and members of ecological planning firms). Data are from OECD PSE (OECD, 2022). For details of the different payments, refer to the online supplementary material C2. Note that in 2023, there have been further adjustments in direct payment schemes (e.g. Mack, Finger, Ammann, & El Benni, 2023). 129Lessons learned and policy implications from 20 years of Swiss agricultural policy reforms: A review of policy evaluations Bio-based and Applied Economics 13(2): 121-146, 2024 | e-ISSN 2280-6172 | DOI: 10.36253/bae-14214 legal principles for the regulation of domestic markets, iii) the regulation of labels and promotion of domestic sales and iv) the specific support of sensitive product markets (crop, wine, cattle, and dairy). These policies create a highly regulated market environment for Swiss farmers and other market actors. In the following, we describe the key policies in each of the four domains. Border protection was and still is one of the most important instruments in Swiss agricultural policy. With the exception of the free trade agreement for cheese between the European Union and Switzerland (see Fin- ger, Listorti, & Tonini, 2017; Irek, 2022), the import of agricultural products is restricted by tariffs and gov- erned by tariff-rate quotas. Consequently, almost 40% of the total support for Swiss farmers (as measured by the producer support estimate) stems from market price support (see Table 2). In contrast to imported food, Switzerland does not regulate domestic production under public law. However, it provides a legal basis for private regulations via stake- holders in the food value chain. The federal government delegates market regulations to the members of differ- ent food value chains, including producer organisations, food processors, traders, and retailers. These interest Table 2. Overview of total financial support (border protection and governmental spending) for Swiss farmers. Objective Instrument Targeted or tailored to… Support (million CHF) Share PSE (2021) Market price support Tariffs and tariff rate quotas Wheat, barley, maize, rapeseed, milk, beef, pig meat, poultry, sheep meat, eggs, other 2447* 41.5% Multifunctionality (including environmental goals) Direct payments See Table 1 2732 46% Competitiveness Milk price supplement for cheese production Milk used to produce cheese 201 9% Payments for non-silage feeding of cows Milk used to produce raw milk cheese 32 Payments for commercial milk Milk used for export products (chocolate, biscuits) 149 Area payments Oilseed cultivation, sugar beet, leguminous crops, grains 77 Concession energy prices 65 Increase demand for domestic products Promotion of domestic agricultural products Advertisement of domestic product categories (milk, meat, fruits, vegetables) 67 1% Structural support Refundable loans Stables, young farmer programme, farm diversification 32 2%Non-repayable loans Stables, residential buildings 3 Development and maintenance of infrastructure Water and road infrastructure, ameliorations, regional projects to support local value chains 84 Support of resource efficiency and sustainability Payments for innovative projects (resource programmes) Different agricultural practices or technologies 25 0.5% Total** 5914 100% Governmental spending thereof (i.e. federal budget) 3402 58% Data source: OECD (2022) *Price support measured in OECD indicator (i.e. market price support); that is, annual monetary value of gross transfers from consumers to agricultural producers arise from policy measures and create a gap between domestic producer prices and the reference prices of a specific agricultural commodity measured at the farm-gate level. **Not considered: Transition payments (expiring in 2023; CHF67 million). Total producer support estimate in 2021: CHF6008 (OECD, 2022). Additional governmental support, namely sup- port by cantons (~CHF200 million), research and extension (~CHF227 million) and social contributions (~CHF60 million); cost of public stockholding (~CHF50 million); and administrative costs (~CHF60 million). Total governmental spending: ~CHF4.1 billion. For further details of the different policy programmes, refer to the online supplementary material on C3 (market regulation), C4 (structural support), C5 (input regulation) and C6 (research and extension). 130 Bio-based and Applied Economics 13(2): 121-146, 2024 | e-ISSN 2280-6172 | DOI: 10.36253/bae-14214 Robert Huber, Nadja El Benni, Robert Finger organisations (so-called “branch organisations”) have the right to determine production volumes, target pric- es and market-clearing measures. The purpose of these “branch organisations” is to countervail market power abuses by input suppliers, the food industry and retailers and guarantee secure food availability for consumers. The government also provides a legal basis for the labelling of agricultural products, such as with respect to type of production (organic) or origin (mountain or Alps) and the protected designation of origin (i.e. Appellation d’origine protégée, AOP, and Indication géographique protégée, IGP). These geographical indi- cations allow typical specialties from defined areas to be protected and differentiated and support their com- petitiveness in domestic and foreign markets (Maye, Kir- wan, Schmitt, Keech, & Barjolle, 2016). Finally, the Swiss government directly regulates and supports specific markets. For example, it subsidises raw milk production that is used for cheesemaking (Finger et al., 2017) and funds compensation payments for milk and cereal production for export commodities. This reduces the costs of domestic food processors in highly competitive markets (cheese, chocolate, biscuits etc.). The government also subsidises the production of spe- cific crops (payments for single crops) to increase their availability on domestic markets with payments per hec- tare. These crops include sugar beets, oilseeds, fodder crops and pulses for human consumption. 4. EFFECTIVENESS OF SWISS AGRICULTUR- AL POLICY: WHAT IS THE EVIDENCE? In this section, we summarise the achievements of these regulations with respect to the economic, eco- logical, and social aims formulated in the constitution, focusing on the main output indicators (see Figure 3). We rely on a review of agricultural policy evaluations in Switzerland during the last 20 years. Our review is based on a systematic search of two sources. First, we system- atically searched for agricultural policy evaluations in the Administration Research Actions Management Infor- mation System (ARAMIS) of the Swiss federal govern- ment. ARAMIS is a database in which the evaluations of the federal administration are stored. We searched the database using the search term ‘agricultural policy’ and found 105 studies from 2002 to 2022. We screened these studies and excluded projects and reports that did not i) focus on agriculture; ii) specifically address a pol- icy instrument (e.g. basic research projects) or iii) evalu- ated correlations between land-use types e.g. extensively managed grasslands and ecological indicators e.g. bird index without focusing on a specific policy program or measure9. We found 16 relevant evaluations. Second, we searched for scientific publications that evaluate Swiss agricultural policy instruments. This search in Goog- le Scholar resulted in additional 17 studies. In total, we included 33 evaluations in our review (see Table 3). 4.1. Economic performance: production and income With respect to the production and economic goals of the Swiss agricultural policy, the outcomes have been mixed. On the one hand, the share of domestic food production of total consumption, (i.e. the degree of self-sufficiency) has been constant10, with some fluctua- tions, over the last 20 years, despite a growing popula- tion (~20% in this period). Labour productivity has been steadily increasing, driven mainly by farm structural change and constant re-investment in farm structures and production infrastructure. The corresponding policy targets (i.e. calorie production, productivity increase and re-investment) have been met. Farm incomes have also increased on average dur- ing the last 12 years (i.e. the period between 2010 and 2022). Key elements of this income development are border protection and farm size growth, increasing income from per-hectare direct payments. With respect to border protection, tariff rate quotas are the main instruments, which are highly effective in maintain- ing high farm-gate prices, as shown in different stud- ies e.g. for meat and vegetables, (Loi et al., 2016) or for dairy products, (Hillen & von Cramon-Taubadel, 2019). In addition, the direct payments have become an impor- tant source of agricultural income, especially in rural and mountainous regions. Average direct payments amount to CHF2700 per hectare of all agricultural land in 2021.11 While these payments are targeted towards public goods from agricultural production, they create windfall effects (i.e. increased income), an important and intended side-effect of the direct payment system in Switzerland. In particular, payments for ensuring food supplies, which comprise more than one-third of all direct payments, have a high income transfer effect (A. Möhring & Mann, 2020). On the other hand, the massive support of agricultur- al production and farm incomes increases economic inef- 9 Please note that we still cite some of these studies in the discussion. 10 Average net self-sufficiency between 2015 and 2020 was 58%. Net self sufficiency i.e. self-sufficiency corrected for fodder imports, was on average 51%. 11 Total support per ha of agricultural land (i.e., including border protec- tion) amounts to ~CHF6000 (see Introduction). Thus, direct payments alone correspond to roughly 46% of the support (see also Table 2). 131Lessons learned and policy implications from 20 years of Swiss agricultural policy reforms: A review of policy evaluations Bio-based and Applied Economics 13(2): 121-146, 2024 | e-ISSN 2280-6172 | DOI: 10.36253/bae-14214 Ta bl e 3. P ol ic y ev al ua tio n st ud ie s i n Sw itz er la nd 2 00 2– 20 22 . Ev al ua tio n In st ru m en t Ke y fin di ng s M et ho d So ur ce 1 Bi od iv er sit y pr og ra m m e Pa ym en ts fo r b io di ve rs ity Pa ym en ts in cr ea se d th e bi od iv er sit y co ns er va tio n ar ea . Th e co m bi na tio n of ac tio n- a nd re su lts -b as ed sc he m es in cr ea se d no t o nl y av er ag e eff ec tiv en es s bu t a lso w in df al l g ai ns . P ay m en ts re su lte d in a p os iti ve re tu rn o f i nv es tm en t (fo r t he p ub lic ). C au sa l i de nt ifi ca tio n (d iff er en ce in d iff er en ce ap pr oa ch ) W ue pp er a nd H ub er (2 02 2) 2 Bi od iv er sit y pr og ra m m e Pa ym en ts fo r b io di ve rs ity Bi od iv er sit y pr om ot io n ar ea s g en er al ly h av e a gr ea te r d iv er sit y of sp ec ie s an d ha bi ta ts th an c on tr ol a re as . Q ua nt ita tiv e ta rg et s ( i.e . h a en ro lle d in th e pr og ra m ) a re m et . Q ua lit y of b io di ve rs ity a re a (e .g . n um be r o f s pe ci es ) a re no t m et , e sp ec ia lly in th e lo w la nd s. M on ito rin g of bi od iv er sit y, in di ca to r as se ss m en t, re gr es sio n an al ys is E. M ei er e t a l. (2 02 1) 3 Re so ur ce p ro gr am m e Re so ur ce p ro gr am m e (R P) an d re so ur ce e ffi ci en cy pa ym en ts (R EP s) Th e RP is g en er al ly w el l r ec ei ve d by th os e in vo lv ed . H ow ev er , t he o rie nt at io n of re so ur ce e ffi ci en cy c on tr ib ut io ns la ck s a c le ar fo cu s o n th e im pa ct o f t he m ea su re s p ro m ot ed . Th is ca lls th e su bs id y in to q ue st io n. R P is m or e effi ci en t th an R EP s. A ss es sm en t o f l eg al an d go ve rn m en ta l do cu m en ts EF K (2 02 1) 4 Bi od iv er sit y pr og ra m m e A gg lo m er at io n pa ym en ts Th e co lla bo ra tiv e de ve lo pm en t o f a gg lo m er at io n pr oj ec ts is b en efi ci al to in cr ea se th e w ei gh t g iv en to b io di ve rs ity b y co nn ec tin g co ns er va tio n sit es in th e pl an ni ng p ro ce ss o f b on us p ay m en t s ch em es . Sp at ia l r eg re ss io n an al ys is H ub er e t a l. (2 02 1) 5 Pr ot ec tio n of d om es tic fo od vi a la be lli ng ‘S w iss ne ss ’ r eg ul at io n Th e Sw iss ne ss re gu la tio n (i. e. re gu la tio n of m in im al st an da rd s t o la be l a pr od uc t “ fr om S w itz er la nd ”) d id n ot a ffe ct d em an d or su pp ly o f d om es tic ag ric ul tu ra l p ro du ct s. A ss es sm en t o f l eg al an d go ve rn m en ta l do cu m en ts , e xp er t su rv ey Fe ig e, Ri ed er , A nn en , an d Ro os e (2 02 0) 6 Su st ai na bl e pr od uc tio n sy st em Su pp or t f or g ra ss la nd -b as ed m ilk p ro du ct io n (G M F) Th e G M F pr og ra m m e re du ce s t he u se o f c on ce nt ra te d fe ed . N o sh or t- te rm eff ec t o n ec ol og ic al o ut co m es w as fo un d. E co no m ic o ut co m es im pr ov ed w ith th e pr og ra m m e. A ge nt -b as ed si m ul at io n m od el S W IS Sl an d M ac k an d Ko hl er (2 01 9) 7 M ar ke t i nt eg ra tio n an d effi ci en cy o f s ea so na l t ar iff ra te q uo ta s Ta riff ra te q uo ta s ( TR Q s) TR Q s a re e ffe ct iv e in p ro te ct in g do m es tic p ro du ct io n ag ai ns t c om pe tin g im po rt s b ut le ad to in effi ci en ci es a nd c re at e re nt s f or im po rt er s. Re gr es sio n an al ys is (p ar ity b ou nd s m od el ) H ill en (2 01 9) 8 Pr ot ec tin g th e Sw iss m ilk m ar ke t f ro m fo re ig n pr ic e sh oc ks Bo rd er p ro te ct io n Pr ic es o f t ar iff -p ro te ct ed d ai ry p ro du ct s a re in flu en ce d by p ric e de ve lo pm en ts in n ei gh bo ur in g co un tr ie s. Th is co ul d no t b e ob se rv ed fo r t he li be ra lis ed ch ee se m ar ke t. Th e qu al ita tiv e di ffe re nt ia tio n of S w iss p ro du ct s c on tr ib ut es m or e to re du ci ng in te rn at io na l p ric e pr es su re th an p ub lic b or de r p ro te ct io n. Pr ic e tr an sm iss io n an al ys is H ill en a nd v on C ra m on -T au ba de l (2 01 9) 9 Bo rd er p ro te ct io n an d do w ns tr ea m in du st rie s Bo rd er p ro te ct io n Th e hi gh m ar ke t p ow er o f u p- a nd d ow ns tr ea m in du st rie s r es ul ts in m ar k- up s f or a gr ic ul tu ra l i np ut s. M or e co m pe tit io n, le ss b or de r p ro te ct io n an d re gu la to ry o ve rs ig ht c ou ld in cr ea se e ffi ci en cy a lo ng th e va lu e ch ai n. Ex pe rt a ss es sm en t W ey a nd G ös se r (2 01 9) 10 Bi od iv er sit y pr og ra m m e Pa ym en ts fo r b io di ve rs ity Th e bi od iv er sit y pr og ra m m e ha s h ad a n eff ec t, bu t s ho rt co m in gs re m ai n (e sp ec ia lly w ith re sp ec t t o th e qu al ity o f t he b io di ve rs ity a re as ). Im pl em en ta tio n of th e pr og ra m m e ha s b ee n sa tis fa ct or y, al be it w ith a hi gh a dm in ist ra tiv e bu rd en . E du ca tio n an d tr ai ni ng o f f ar m er s s ho ul d be re in fo rc ed to in cr ea se e ffe ct iv en es s. C oh er en ce w ith o th er p ol ic y m ea su re s sh ou ld b e ch ec ke d. C or re la tio na l a na ly sis , in te rv ie w s, ca se st ud ie s Fo nt an a et a l. (2 01 9) (C on tin ue d) 132 Bio-based and Applied Economics 13(2): 121-146, 2024 | e-ISSN 2280-6172 | DOI: 10.36253/bae-14214 Robert Huber, Nadja El Benni, Robert Finger Ev al ua tio n In st ru m en t Ke y fin di ng s M et ho d So ur ce 11 Fo od su pp ly su pp or t Pa ym en t f or fo od su pp ly Pa ym en ts fo r f oo d su pp ly c on tr ib ut e eff ec tiv el y to c al or ie p ro du ct io n an d in cr ea se fa rm in co m es . E ffi ci en cy c ou ld b e im pr ov ed b y fo cu sin g pa ym en ts on se le ct ed c ro ps a nd fe rt ile so ils . Th e eff ec tiv en es s o f t he in st ru m en t cr iti ca lly d ep en ds o n th e de fin iti on o f f oo d se cu rit y. A ge nt -b as ed si m ul at io n m od el S W IS Sl an d A . M öh rin g, M ac k, Zi m m er m an n, M an n, an d Fe rja ni (2 01 8) 12 Bi od iv er sit y pr og ra m m e A gg lo m er at io n pa ym en ts Th er e w as h ig h pa rt ic ip at io n of fa rm er s. Th e ag gl om er at io n bo nu s, ho w ev er , d id n ot a llo w th e pr op or tio n of q ua lit at iv el y va lu ab le b io di ve rs ity co ns er va tio n ar ea s t o in cr ea se (a cr os s a ll pr od uc tio n re gi on s) . C om pl ex ad m in ist ra tio n w as o ne im po rt an t b ar rie r. In te rv ie w s, ca se st ud ie s Je nn y, St ud er , a nd Bo ss ha rd (2 01 8) 13 Pr od uc tio n su pp or t o f m ilk Pa ym en t f or m ilk p ro ce ss ed in to c he es e A bo ut tw o- th ird s o f t he p ay m en ts m ad e be ne fit m ilk p ro du ce rs . Th e pa ym en t d ire ct ly a ffe ct s c he es e pr od uc tio n an d ex po rt s b ut a lso h as in di re ct eff ec ts o n ot he r d ai ry p ro du ct s. Th e fin di ng s s ug ge st a n et w el fa re g ai n fr om el im in at io n. Ve ct or a ut or eg re ss iv e m od el , C A PR I ( pa rt ia l eq ui lib riu m m od el ) Fi ng er e t a l. (2 01 7) 14 Ec ol og ic al d ire ct p ay m en ts Pa ym en ts fo r b io di ve rs ity an d la nd sc ap e Th er e is la rg e he te ro ge ne ity in p ro vi sio n co st s f or e nv iro nm en ta l s er vi ce s. Ta rg et in g an d ta ilo rin g ha ve th e po te nt ia l t o in cr ea se th e effi ci en cy o f t he cu rr en t d ire ct p ay m en t s ys te m . C os t a cc ou nt in g, in te rv ie w s, ca se st ud ie s H ub er , F lu ry , M ei er , an d M ac k (2 01 7) , 15 Su st ai na bl e pr od uc tio n sy st em Su pp or t f or g ra ss la nd -b as ed m ilk p ro du ct io n (G M F) Th e G M F pr og ra m m e re du ce s n itr og en su rp lu se s, al th ou gh th e eff ec t i s v er y sm al l. A n in cr ea se in p ay m en ts w ou ld h av e lit tle a dd iti vi ty . A ge nt -b as ed si m ul at io n m od el S W IS Sl an d M ac k an d H ub er (2 01 7) 16 Re du ct io n in n itr og en su rp lu se s In st ru m en ts fo r t he ev al ua tio n of n itr og en Si ng le p ol ic y in st ru m en ts (m ea t t ax , f er til ise r t ax e tc .) ar e no t s uffi ci en t t o re ac h th e ta rg et ed re du ct io n in n itr og en su rp lu s. A c oh er en t p ol ic y m ix is ne ed ed . A ge nt -b as ed si m ul at io n m od el S W IS Sl an d Sc hm id t e t a l. (2 01 7) ; Sc hm id t, M ac k, M an n, a nd S ix (2 02 1) ; Sc hm id t, N ec pa lo va , M ac k, M öh rin g, a nd Si x (2 02 1) 17 Po lic y ev al ua tio n of ta riff ra te q uo ta s Bo rd er p ro te ct io n (T RQ s) TR Q s p ar tly re ac h th ei r p ol ic y ob je ct iv es , a nd th e po lic y ca n th er ef or e be c on sid er ed to h av e be en p ar tly e ffe ct iv e. H ow ev er , t he p ol ic y is cl ea rly in effi ci en t. In a dd iti on to th e vo lu m e of th e TR Q s a nd th e siz e of th e ou t- of - qu ot a du ty , T RQ a dm in ist ra tio n m et ho ds a lso h av e an im po rt an t r ol e in th is re sp ec t. Ec on om et ric ti m e se rie s a na ly sis Lo i e t a l. (2 01 6) 18 Ev al ua tio n of la nd sc ap e qu al ity p ay m en ts La nd sc ap e qu al ity p ay m en t (L Q P) LQ Ps h av e pr ov en to b e an e ffe ct iv e to ol to p ay fo r m ai nt ai ni ng a nd pr om ot in g la nd sc ap e qu al ity . H ow ev er , t he re a re c on sid er ab le w in df al l g ai ns by fa rm er s f or m ea su re s t ha t t he y w ou ld n ev er th el es s h av e ap pl ie d. C as e st ud ie s, ex pe rt w or ks ho ps St ei ge r, Lü th i, Sc hm itt , a nd Sc hü pb ac h (2 01 6a ) 19 Ru ra l d ev el op m en t ( vi ta lit y an d at tr ac tiv en es s o f r ur al la nd sc ap es ) Ru ra l d ev el op m en t in st ru m en ts Th er e w as a p os iti ve c or re la tio n be tw ee n m un ic ip al iti es w ith st ro ng ag ric ul tu re a nd v ita lit y. At tr ac tiv en es s s ho w ed o nl y a w ea k ne ga tiv e st at ist ic al co rr el at io n. Th e st ud y un de rli ne d th e im po rt an ce o f a gr ic ul tu re a nd ag ric ul tu ra l p ol ic y fo r r ur al a re as . C or re la tio na l a na ly sis , ex pe rt a ss es sm en t Su te r e t a l. (2 01 6) 20 In ve st m en t a id In ve st m en t s up po rt Be tw ee n a qu ar te r a nd a th ird o f t he su bs id ise d in ve st m en t p ro je ct s w ou ld ha ve b ee n im pl em en te d in e xa ct ly th e sa m e w ay e ve n w ith ou t t he in ve st m en t as sis ta nc e; in th is re sp ec t, th ey h ad n o im pa ct . A ss es sm en t o f l eg al an d go ve rn m en ta l do cu m en ts EF K (2 01 5) (C on tin ue d) Ta bl e 3. (C on tin ue d) . 133Lessons learned and policy implications from 20 years of Swiss agricultural policy reforms: A review of policy evaluations Bio-based and Applied Economics 13(2): 121-146, 2024 | e-ISSN 2280-6172 | DOI: 10.36253/bae-14214 Ev al ua tio n In st ru m en t Ke y fin di ng s M et ho d So ur ce 21 M ea su re m en t o f f ar m si ze Fa rm si ze re gu la tio ns (s ta nd ar d la bo ur fo rc e, SA K ) Th e SA K sy st em w as sh ow n to b e eff ec tiv e w he n us ed a s a n en tr y cr ite rio n th ro ug h a th re sh ol d or a s a n ad m in ist ra tiv e de lim ita tio n m ea su re . H ow ev er , w he n us ed a s t he so le se le ct io n cr ite rio n, th e SA K sy st em m us t b e ra te d m or e cr iti ca lly . In te rv ie w s, ex pe rt w or ks ho ps , c as e st ud ie s H ub er , M ei er , a nd Fl ur y (2 01 4) 22 Eff ec ts o f a gr ic ul tu ra l po lic y re fo rm s a nd fa rm ch ar ac te ris tic s o n in co m e ris k D ire ct p ay m en ts A gr ic ul tu ra l p ol ic y re fo rm s h av e de cr ea se d th e va ria bi lit y of fa rm re ve nu es an d ho us eh ol d in co m es in S w itz er la nd . H en ce , t he c ha ng e fr om m ar ke t su pp or t t o de co up le d di re ct p ay m en ts re du ce s t he in co m e ris k of S w iss fa rm er s. Ec on om et ric a na ly sis o f ac co un ta nc y da ta El B en ni , F in ge r, an d M an n (2 01 2) 23 In ve st m en t a id in r ur al de ve lo pm en t In ve st m en t a id s In ve st m en t a id c on tr ib ut es to th e im pr ov em en t o f e co no m ic c on di tio ns in ru ra l a re as , a nd e sp ec ia lly in m ou nt ai n ar ea s. Th is eff ec t, ho w ev er , i s o nl y m od er at e, co ns id er in g th e po pu la tio n of a ll pr oc es sin g en te rp ris es . In te rv ie w s, ex pe rt w or ks ho p, c as e st ud ie s Fl ur y, G er be r, G iu lia ni , a nd B er ge r (2 01 2) 24 Su pp or t o f s um m er in g pa st ur es Pa ym en ts a nd re gu la tio ns Th e re gu la tio ns fo r s um m er in g pa st ur es a re e ffe ct iv e. Pa ym en ts fo r su m m er in g pa st ur es in cr ea se th e ut ili sa tio n of th e A lp s. H ow ev er , t he o ve ra ll co st s o f s um m er in g m ay in cr ea se d ue to a dd iti on al la bo ur a nd in fr as tr uc tu re ne ed s. Fa rm su rv ey , de sc rip tiv e an al ys is of c en su s d at a, e xp er t as se ss m en t, ag en t- ba se d m od el lin g La ub er , C al ab re se , Vo n Fe lte n, F isc he r, an d Sc hu lz (2 01 1) 25 So ci al p ro te ct io n In ve st m en t a id s In st ru m en ts a re e ffe ct iv e. H ow ev er , o nl y ve ry fe w fa rm s n ee d th em , a nd th us , th e effi ci en cy o f t he p ro gr am m e is lo w, g iv en it s h ig h ad m in ist ra tiv e bu rd en . Ex pe rt in te rv ie w s a nd as se ss m en t Fl ur y an d Pe te r (2 01 1) 26 O rd in an ce fo r e co lo gi ca l qu al ity Pa ym en t s ch em e A ct io n- ba se d pa ym en ts w er e fo un d to h av e lo w e ffe ct iv en es s. A re pl ac em en t w ith re gi on al ly ta ilo re d re su lts -b as ed p ay m en ts w as su gg es te d. Ex pe rt a ss es sm en t, in te rv ie w s, ca se st ud ie s M an n (2 01 0) 27 A gr i-e nv iro nm en ta l p ol ic y C ro ss -c om pl ia nc e st an da rd s Th e ev al ua tio n of th e ‘p ro of o f e co lo gi ca l p er fo rm an ce ’ w ith re sp ec t t o ni tr og en (N ) a nd p ho sp ho ru s ( P) sh ow ed a n ov er al l r ed uc tio n of d iff us e N an d P po llu tio n fr om a gr ic ul tu re . H ow ev er , t he ta rg et s ( -3 3% N a nd -5 0% P ) w er e no t m et . C or re la tio na l a na ly sis H er zo g, P ra su hn , Sp ie ss , a nd R ic hn er (2 00 8) 28 Fa rm st ru ct ur al c ha ng e Re gu la tio n of fa rm su cc es sio n Th e on go in g de ve lo pm en t o f s iz e st ru ct ur e is so sl ow th at it re st ric ts th e po te nt ia l r ed uc tio n of p ro du ct io n co st s, w hi ch w ou ld b e im po rt an t t o in cr ea se th e co m pe tit iv en es s o f t he fa rm in g se ct or . M ar ko v- ch ai n sim ul at io n B. M ei er , G iu lia ni , an d Fl ur y (2 00 9) 29 Po lic y- re la te d tr an sa ct io n co st s o f d ire ct p ay m en ts in Sw itz er la nd – A n as se ss m en t o f p ol ic y- re la te d tr an sa ct io n co st s i n th e G ris on s a nd Z ur ic h ca nt on s s ho w ed th at th es e co st s a m ou nt to 1 .8 % a nd 2 .8 % o f t he o ve ra ll pa ym en ts , r es pe ct iv el y. Th us , t he d ire ct p ay m en ts sy st em is c ha ra ct er ise d by re la tiv el y hi gh tr an sf er e ffi ci en cy . In te rv ie w s, ca se st ud ie s Bu ch li an d Fl ur y (2 00 6) 30 C on ce pt io n of th e Sw iss di re ct p ay m en t s ys te m D ire ct p ay m en ts Th e ex pe rie nc e fr om d ec ou pl in g sh ow s t ha t s tr uc tu ra l c ha ng e in a gr ic ul tu re is bu ffe re d, th at th e ec ol og ic al q ua lit y of S w iss la nd sc ap es is m ai nt ai ne d or en ha nc ed a nd th at in di vi du al p ro gr am m es a re p ar tly e ffe ct iv e. Ex pe rt a ss es sm en t M an n (2 00 3) 31 Eff ec t o f d ire ct p ay m en t sy st em D ire ct p ay m en ts D ire ct p ay m en ts h av e ha d th ei r i nt en de d eff ec t. A re a- ba se d pa ym en t in cr ea se s a nd st ab ili se s f ar m in co m e. C or re la tio na l a na ly sis , se ct or su pp ly m od el M an n an d M ac k (2 00 4) 32 D ec en tr al ise d se ttl em en t o f th e co un tr y A ll in st ru m en ts Th e fe de ra l g ov er nm en t c ou ld sp en d ar ou nd C H F7 00 m ill io n le ss e ac h ye ar o n th e go al o f d ec en tr al ise d se ttl em en t. Th is im pl ie s t ha t t he c ur re nt ag ric ul tu ra l p ol ic y is no t s uffi ci en tly e ffe ct iv e w ith re ga rd to ta rg et in g de ce nt ra lis ed se ttl em en t a nd so ci al g oa ls. C or re la tio na l a na ly sis , be nc hm ar ki ng Ri ed er , B uc hl i, an d Ko pa in sk y (2 00 4) 33 Ev al ua tio n of m ar ke t su pp or t ( m ilk , m ea t a nd eg gs ) Bo rd er p ro te ct io n Bo rd er p ro te ct io n ha s p ro ve n eff ec tiv e in p ro te ct in g th e lo ca l g ra in , d ai ry a nd m ea t m ar ke ts . N o eff ec t h ad b ee n fo un d fo r t he e gg m ar ke t. Ec on om et ric an al ys is (e qu ili br iu m di sp la ce m en t m od el ) Ko ch (2 00 2) Ta bl e 3. (C on tin ue d) . 134 Bio-based and Applied Economics 13(2): 121-146, 2024 | e-ISSN 2280-6172 | DOI: 10.36253/bae-14214 Robert Huber, Nadja El Benni, Robert Finger ficiencies along three axes. First, border protection creates high costs for domestic consumers and intermediaries, reducing consumer choice and economic welfare (Gray, Adenäuer, Flaig, & van Tongeren, 2017; Hillen, 2019). Second, the Swiss tariff rate quotas are economically inefficient, in the sense that they increase prices along the whole value chain and not only at the farm-gate level (Loi et al., 2016); they also create rents to down- stream actors that would not exist in the absence of the policy (Hillen, 2019). In this context, studies have shown that there could be considerable market power among retailers. An empirical study after the first agricultural reform step in the early 1990s indeed found indications of asymmetric price transmission between produce and retail prices in the pork market (Abdulai, 2002) imply- ing that downstream market actors have market power. An analysis focusing on dairy and cheese production between 2004 and 2018, however, did not find such asymmetric price transmissions from producer to con- sumer (Hillen, 2021). Even though a direct comparison between these studies is not possible, one potential rea- son for the absence of asymmetric price transmissions in more recent studies may have been the establishment of “branch organisations” that regulate domestic markets on a private law basis and that lead to very specific levels of protection for products of different types and quality, which reduces asymmetric price transmission (Esposti & Listorti, 2018; Hillen, 2021). Third, the regulatory environment also slows resource allocation within the sector to more profitable farms. In fact, the governmental support of approxi- mately CHF4 billion is higher than the net sectoral income of roughly CHF3 billion. This implies that capi- tal invested by the government into agriculture does not fully trickle down to the farmers. This is, among others, since farmers are compensated for the (often costly) pro- vision of ecosystem services, but it may also reflect that efficiency gains could be achieved by re-allocating gov- ernmental spending. Overall, the high regulatory envi- ronment maintains production levels in Swiss agricul- ture and ensures a certain level of sectoral income at the expense of low competitiveness and high input and con- sumer prices (Gray et al., 2017). 4.2. Environmental performance: landscape maintenance, biodiversity, resource efficiency and animal welfare A key characteristic of Swiss agricultural policy is that almost 40% of governmental spending is for vol- untary agri-environmental direct payment programmes supporting landscape maintenance, biodiversity con- servation and sustainable production systems, includ- ing programmes for low-input use, animal welfare12 and organic agriculture. In addition, there are impor- tant cross-compliance measures for the receipt of direct payments. The introduction of these measures clearly reduced some of the negative environmental effects of the agricultural sector and supported positive ones (e.g., Herzog, Jacot, Tschumi, & Walter, 2017). The environ- mental goals addressed by these payments have been assessed across the following six categories: biodiversity, landscape, greenhouse gas emissions, nitrogen and phos- phorus as well as pesticides13 (BAFU & BLW, 2016). Biodiversity: There has been an increase in areas for biodiversity conservation, which has positive associa- tions with flora and fauna. This was observed by several scientific field studies focusing on different taxa, such as vascular plants (Aviron et al., 2008; Herzog et al., 2005; Kampmann et al., 2008; Kampmann, Lüscher, Konold, & Herzog, 2012; Knop, Kleijn, Herzog, & Schmid, 2006), arthropods (Albrecht et al., 2010; Aviron et al., 2008), mammals (Zellweger-Fischer, Kéry, & Pasinelli, 2011) and birds (Birrer et al., 2007; Engist, Finger, Knaus, Guélat, & Wuepper, 2023; Zingg, Grenz, & Humbert, 2018; Zingg, Ritschard, Arlettaz, & Humbert, 2019). In addition, flower strips and other ecological elements have had a positive effect on biodiversity and pest man- agement, as shown by different field and experimental studies (Herzog et al., 2017; Tschumi et al., 2016; Tschu- mi, Albrecht, Entling, & Jacot, 2015). It is important to note that the Swiss direct payment programme to support biodiversity targets quantitative and qualitative goals (see Mack, Ritzel, & Jan, 2020). Areas enrolled in the biodiversity programme fulfil the quantitative target of 7% of the utilised agricultural area. Of these areas, more than 75% are also enrolled in agglomeration projects. This implies that the quan- titative goals (measured in ha) are being met. However, the ecological quality of these areas is still insufficient to reverse or halt biodiversity decline in Switzerland (E. Meier et al., 2021) and that biodiversity is still not in a good state. For example, Engist et al. (2023) showed that there are fewer and less diverse birds in Switzerland than in neighbouring countries. In addition, the biodiver- sity programme also creates windfall gains for farmers (Wuepper & Huber, 2022). Landscape: The maintenance of Swiss agricultural landscapes is threatened by two main factors: i) land 12 Participation in animal welfare programmes is high. For example, in 2020, 60% of animals were kept in animal-friendly housing systems and 80% were under free-range production systems. 13 Soil protection is an additional goal in Swiss agricultural policy. How- ever, no monitoring programme has been implemented, and the goal achievement cannot be analysed. 135Lessons learned and policy implications from 20 years of Swiss agricultural policy reforms: A review of policy evaluations Bio-based and Applied Economics 13(2): 121-146, 2024 | e-ISSN 2280-6172 | DOI: 10.36253/bae-14214 abandonment in mountain regions and ii) the loss of agricultural land to settlement expansion in the low- lands. The explicit goal of the direct payments for land- scape maintenance is to reduce annual land abandon- ment by 1400 hectares, or roughly 20% of the current rate. However, land abandonment is not monitored on a regular basis, and thus, an evaluation of the measures remains difficult. The introduction of the payments, however, stabilised the number of animals sent to sum- mering pastures, despite predictions that the reduction would continue (Herzog & Seidl, 2018; Schulz, Lauber, & Herzog, 2018). Land abandonment is therefore much less eminent, compared to in other European mountain regions (Schirpke, Tasser, Leitinger, & Tappeiner, 2022). Finally, the evaluation of the landscape quality payments implied that farmers realise windfall gains with little environmental additionality (Mann et al., 2023; Steiger, Lüthi, Schmitt, & Schüpbach, 2016b). Greenhouse gas emissions: The amount of green- house gas emissions reduced by 11.5% with the introduc- tion of the direct payment system (7.3 million t CO2eq to 6.5 million t CO2eq). The main reasons for this were a reduction in the animal herd and decreasing inputs of mineral nitrogen (Leifeld & Fuhrer, 2005) after the introduction of the cross-compliance standards. Since then, emissions have remained stable, despite the goal to reduce agricultural greenhouse emissions by 40% by 2050 compared to the emission level in 1999 (FOAG et al., 2023). Nitrogen and phosphorus: The introduction of cross-compliance measures for all Swiss farms reduced the nitrogen and phosphorus pollution of ground and surface water in the first years of the new policy at the beginning of the century (Herzog et al., 2008; Kupper, Bonjour, & Menzi, 2015). Thus, increasing environmen- tal standards for all farms has had a major effect on the overall ecological performance of the agricultural sec- tor. The main leverage came from the regulation that all farms should comply with the balanced use of nutrients (i.e. the annual nitrogen and phosphorus balance needs to be lower than 110% of crop requirements) to receive direct payments. However, from the initial reduction until about 2005, phosphorus and nitrogen surpluses remained constant. By 2020, the total nitrogen surplus amounted to more than 80,000 t. In certain regions in Switzerland with high animal density (see e.g. Spörri, El Benni, Mack, & Finger, 2023), the aerial deposition of nitrogen had risen to above 40 kg per ha per year (Reuti- mann, Ehrler, & Schäppi, 2022). Beyond the implemen- tation of cross-compliance measures, political efforts to reduce nutrient load in Swiss agriculture have been less successful. For example, the grass-based milk and meat production scheme, which aims to reduce the use of concentrate in roughage-consuming animals, did not reduce nitrogen surpluses but created windfall gains for participating farms (Bystricky, Bretscher, Schori, & Mack, 2023; Mack & Huber, 2017; Mack & Kohler, 2019). The increased share of sustainable production practic- es such as organic production (Necpalova et al., 2018; Nemecek et al., 2011; Schader et al., 2013; Zimmermann, Baumgartner, Nemecek, & Gaillard, 2011) has also not substantially decreased nutrient load at the sectoral lev- el. The next policy reform targets a reduction of 20% of phosphorus and nitrogen surpluses in Swiss agriculture by 2030, compared to the mean emission levels between 2014 and 2016. Pesticides: At the beginning of this century, Swiss agricultural policies did not focus explicitly on the risks from pesticides, despite their broad application in all major Swiss crops (de Baan, Spycher, & Daniel, 2015). Policy goals for groundwater pollution (i.e. maximum of 0.1 µg of pesticides per litre of groundwater) have been achieved in the majority of monitoring locations (FC, 2017). In contrast, pesticide loads in small sur- face water bodies were found to be often above the legal thresholds (Spycher et al., 2018). This triggered societal and political debates and finally new political initiatives such as a national action plan and new direct payment programmes that also included public-private coopera- tion (e.g., Mack et al., 2023; N. Möhring & Finger, 2022; Schaub, Huber, & Finger, 2020). However, the monitor- ing and evaluation of these efforts remains a challenge, e.g. due to data availability regarding detailed pesticide use (similar to the EU e.g., Mesnage et al., 2021) and the complex assessment of health and environmental impacts (N. Möhring et al., 2023). The most recent pol- icy goal is to reduce the risks from pesticides by 50% by 2027, compared to the situation in 2012–2015 (Finger, 2021; Mack et al., 2023). 4.3. Social sustainability dimension: decentralised settlement, family farming, income security, administrative burden Despite farm structural change, agriculture is still an important pillar of Swiss rural economies, espe- cially in the mountain regions (Ecoplan & HAFL, 2016; Flury, Huber, & Tasser, 2013; Rieder et al., 2004). New policy instruments focusing on investment support along the whole rural value chain successfully support the economic viability of many farms (Flury, Abegg, & Jeannerat, 2017). More importantly, while there is a continued discussion about what family farms imply (Guarín et al., 2020), the existing policies support con- tinuous re-investment in farm structures. The mean 136 Bio-based and Applied Economics 13(2): 121-146, 2024 | e-ISSN 2280-6172 | DOI: 10.36253/bae-14214 Robert Huber, Nadja El Benni, Robert Finger farm size in Switzerland is 21 hectares (FOAG, 2022b). The dualistic development of farm structures (i.e. an increase in very large and small farms combined with a decrease of mid-sized farms) is much less pronounced in Switzerland than in other countries (Bokusheva & Kimura, 2016). Table 4. Assessment of policy reforms, policy implications and lessons learned from Swiss agricultural policy. Evaluations* Assessment (what has worked and what not?) Lessons learned Implication for future reforms [7], [8], [11], [13], [17], [22], [31], [33] Stabilisation of farm gate prices and farm incomes Policy is effective with respect to maintain farmers’ livelihoods. Border protection and direct payments have a high-income transfer effect. Increases in efficiency needed [5], [7], [8], [11] Self-sufficiency maintained despite growing population; production targets (in calories) are met The farming sector can steadily improve productivity. [20], [21], [28], [32] Slowing of structural change Public policy maintains small-scale farming structures. [1], [5], [7], [8], [9], [13], [16], [17], [31], [33] High costs for consumer and/or taxpayers There is low efficiency in public support. [19], [21], [24], [25], [31], [32] Rural viability is maintained, but only with high public spending [3], [19] Many environmental goals with unclear target values or indicators There is a lack of focus on funding. Coherence required [14], [16], [30] Trade-off between production (in calories) and environmental targets (N, P, GHG etc.) There is the potential to re-allocate funds (i.e. public funding for public goods). [20], [21], [23], [25] Continuous re-investment in farm structures Re-investment needs to be aligned with environmental goals. [7], [9] Rents for up- and downstream actors There is a need for coordination between market and policy interests. [6], [16], [27], [30] Nitrogen, phosphorus and greenhouse gas emissions stable after an initial decrease with policy reform Forcing farmers to comply with minimal standards has a leveraging effect on the results indictors. Strengthening cross- compliance [6], [15], [27], [30] Environmental targets (i.e. pesticide load or greenhouse gas or ammonia emissions) not met Increasing standards can help to achieve environmental targets. [1], [4], [10], [14], [18], [26], [30] Biodiversity programme contributes to halting biodiversity loss Existing targeting and tailoring provide the basis for effective biodiversity conservation. Supporting differentiation [1], [2], [10], [12], [24], [26] Most environmental targets are only met quantitatively (i.e. output indicators) and not qualitatively (i.e. result indicators) Further efforts are needed to improve the quality of existing biodiversity conservation areas. [1], [11], [15], [18], [26] Programmes supporting environmentally friendly farming create windfall effects A shift to results-based payments (i.e. increasing farmers’ discretion) could increase the efficiency of the programmes. [3], [4], [12], [29] High administrative burden Digitalisation is needed to reconcile administrative burden and differentiation of policy incentives. *The numbers refer to the evaluation sources in Table 3 i.e. [1] Wuepper and Huber (2022); [2] Meier et al. (2021); [3] EFK (2021); [4] Huber et al. (2021); [5] Feige, Rieder, Annen, and Roose (2020); [6] Mack and Kohler (2019); [7] Hillen (2019); [8] Hillen and Von Cra- mon-Taubadel (2019); [9] Wey and Gösser (2019); [10] Fontana et al. (2019); [11] A Möhring, Mack, Zimmermann, Mann, and Ferjani (2018); [12] Jenny, Studer, and Bosshard (2018); [13] Finger et al. (2017); [14] Huber, Flury, Meier, and Mack (2017); [15] Mack and Huber (2017); [16] Schmidt et al. (2017), Schmidt, Mack, Mann, and Six (2021), Schmidt, Necpalova, Mack, Möhring, and Six (2021); [17] Loi et al. (2016); [18] Steiger, Lüthi, Schmitt, and Schüpbach (2016); [19] Suter et al. (2016); [20] EFK (2015); [21] Huber, Meier, and Flury (2014); [22] El Benni, Finger, and Mann (2012); [23] Flury, Gerber, Giuliani, and Berger (2012); [24] Lauber, Calabrese, Von Felten, Fischer, and Schulz (2011); [25] Flury and Peter (2011); [26] Mann (2010); [27] Felix Herzog, Prasuhn, Spiess, and Richner (2008); [28] B. Meier, Giuliani, and Flury (2009); [29] Buchli and Flury (2006); [30] Mann (2003); [31] Mann and Mack (2004), [32] Rieder, Buchli, and Kopain- sky (2004); [33] Koch (2002). 137Lessons learned and policy implications from 20 years of Swiss agricultural policy reforms: A review of policy evaluations Bio-based and Applied Economics 13(2): 121-146, 2024 | e-ISSN 2280-6172 | DOI: 10.36253/bae-14214 In addition, the restrictive law on rural land has two important implications. First, farm succession in Swit- zerland is almost exclusively restricted to the descend- ants of farmers. Second, farms are kept among fami- lies to profit from fiscal rewards, zoning decisions or advantages related to living outside the building zone. Thus, most farms that leave the sector are small and at the end of the generational cycle (e.g., Zorn & Zimmert, 2022). Overall, the regulations with respect to structur- al changes in Swiss agricultural policy have led to high investment on a sector level, despite small farm struc- tures and highly regulated land markets, with the con- sequence being the family-based and continuous, rather than dualistic, development of farm structures. While income inequality in Swiss agriculture has increased as a consequence of the decoupling of price and income policies (especially between lowlands and hilly and mountain regions), the introduction of the direct payment system has positively influenced income stability by decreasing the variability of farm revenues and household income in Swiss agriculture (El Ben- ni & Finger, 2013; El Benni, Finger, & Mann, 2012; El Benni, Finger, Mann, & Lehmann, 2012). Even though direct payments also aim to support farm incomes, the income goals of agricultural policies cannot be con- sidered to have been achieved, and off-farm income is an indispensable diversification strategy of Swiss farm households (El Benni & Schmid, 2021). Despite ongoing discussions about the interpretation and measurement of farm incomes (Finger & El Benni, 2021), the strong governmental support has secured stable farm incomes in Swiss agriculture over recent decades. In this con- text, Zimmert and Zorn (2022), using a spatial regres- sion discontinuity design, showed that direct payments increased family farm employment. The analysis pointed to not only the economic but also the social side-effects of the current direct payment system because the addi- tional labour force often consists of non-salaried female household members. Without a wage, these family mem- bers are not sufficiently protected socially, an issue that should gain importance in the discussion on the further development of agricultural policy. Finally, a flipside of the enforced conditionality of the Swiss direct payments system is that a high admin- istrative burden is placed on both the farmers and the government (Mack, Ritzel, Heitkämper, & El Benni, 2021; Ritzel, Mack, Portmann, Heitkämper, & El Benni, 2020). While the actual costs of monitoring and imple- menting agricultural policies are less than 5% of the total budget for agriculture, farmers perceive admin- istration to be a burden (El Benni et al., 2022; Mack, Kohler, Heitkämper, & El-Benni, 2019). 5. DISCUSSION: LESSON LEARNED AND IMPLICA- TIONS FOR FUTURE POLICY DEVELOPMENT In this section, we discuss findings from our review with respect to the general lessons learned from Swit- zerland’s experience and the following four implications that may provide entry points for the discussion of spe- cific policy design features that would be transferable also to other countries. First, the economic and social goals have largely been met, but the costs for consumers and taxpayers are high (approximately CHF130,000 per farm per year, or ~CHF6,000 per hectare of agricultural land per year). Thus, increasing the efficiency of Swiss agricultural policy is key. Second, programmes and instruments need to be more coherently embedded in the food and agricultural sector not only to reconcile the economic and environmental goals but also to improve collaboration along the value chain. Third, standards for all farms have increased the overall ecological perfor- mance of the agricultural sector. Strengthening of cross- compliance measures has the potential to provide valua- ble leverage and support to the agri-environmental fields that fail to meet their targets. Fourth, differentiating targets (e.g. in space) and increasing farmers’ discretion over how to achieve goals provide promising approaches to realise the premise of public funding for public goods. 5.1. Increasing efficiency One of the key preconditions for the Swiss policy system is its restrictive border protection and generous governmental budget for agriculture. High farm-gate prices and large funds for direct payments have created a system that effectively supports the achievement of some policy targets, such as a food supply, landscape mainte- nance and contribution to decentralised settlement. The support has also allowed the farming sector to steadily increase labour productivity and to re-invest in small- scale infrastructure (maintaining family-based, peasant farm structures). However, the efficiency of the system is low, includ- ing the payments for ensuring that food supplies are effective in increasing calorie production and for main- taining arable land for crop production (A. Möhring et al., 2018). Up to 25% of these payments could be saved if criteria other than the number of calories produced were considered (e.g. maintaining productive land with- out calorie targets; (A. Möhring & Mann, 2020). Also, the targeting and tailoring of policies has led to wind- fall gains for farmers. The design of a biodiversity pro- gramme combining different schemes, for example, cre- ates larger windfall effects (Wuepper & Huber, 2022). 138 Bio-based and Applied Economics 13(2): 121-146, 2024 | e-ISSN 2280-6172 | DOI: 10.36253/bae-14214 Robert Huber, Nadja El Benni, Robert Finger This implies that if the programme has additional envi- ronmental benefits, the implementation of the corre- sponding direct payment comes with high public costs. The restricted farm structural change also implies that farms with low competitiveness remain in the sector (Suter et al., 2016). Thus, increasing efficiency and reducing the windfall effects of agri-environmental instruments would permit funds to be reallocated to more effective instruments and thus boost the environmental impact of agricultural programmes. In its latest assessment of Swiss agricul- tural policy, the OECD recommended that Switzerland further liberalise its border protection and reduce trade barriers while also reducing the overall level of general direct payments (OECD, 2015). This should allow farm- ers to respond to market signals, increase their competi- tiveness and bring about greater efficiency in the Swiss policy approach. How to align market liberalisation and the support of peasant farm structures or the contri- bution to decentralised settlement in this context is an important topic for future research. 5.2. Improving coherence The acceptance of conflicting goals and trade-offs in agricultural policy-making creates challenges for policy coherence (Coderoni, 2023; Eyhorn et al., 2019; Mann & Kaiser, 2023). Trade-offs are inherent in the agricul- tural and food system, and there is no simple strategy that would allow all positive and negative externalities from agricultural production to be disentangled. The key challenge in Swiss agricultural policy is the conflicting goals that lead to trade-offs. This involves, for example, the production goals (measured in calories or degree of self-sufficiency), the maintenance of decentralised peasant farm structures and the environmental targets (reductions in emissions and the support of biodiver- sity conservation areas). Given the current inefficien- cies in supporting the agricultural sector, reallocating funds, and stronger focusing on the principle of “public funding for public goods” could alleviate the trade-offs between these goals (e.g., Bateman & Balmford, 2018; S. Wunder et al., 2018). This includes, for example, that instruments that promote production include sustain- ability standards or that support investment should be aligned to environmental or animal welfare goals. A bet- ter alignment of policies would not make the inherent trade-offs disappear, but it could certainly improve the efficiency of the public money spent on agriculture. Furthermore, some of the windfall gains from agri- cultural policy support end up in up- and downstream companies with a vested interest in maintaining pro- tection. Thus, better policy coherence should not only focus on aligning policy instruments but also include the actors along the value chain. In this context, the link between public incentives and private sustainability ini- tiatives (e.g. trough labelling) is key (Poppe & Koutstaal, 2020). For example, the development of a new, pesticide- free standard for wheat production in Switzerland has allowed the creation of synergies between public and private (market) goals, where farmers receive compensa- tion for not using pesticides from governmental direct payments and private price mark-ups (N. Möhring & Finger, 2022). The political system in Switzerland enables partial policy success for different interest groups when nego- tiating policy reforms (Metz et al., 2020). Together with public plebiscites on agricultural policy questions (Huber & Finger, 2019), this can have the effect that the result- ing policy has to tolerate certain conflicts in the overall policy. Here, the alignment of agricultural policies with more coherent strategies, such as a common food policy that includes a wider range of stakeholders (De Schut- ter, Jacobs, & Clément, 2020) within specific areas such as pesticides (N. Möhring et al., 2020) and nitrogen use (Kanter et al., 2020) is important . Beyond the integra- tion of stakeholders along value chains, a food system policy could also include demand-side policy instruments for sustainable food consumption (Ammann, Arbenz, Mack, Nemecek, & El Benni, 2023), consider sustain- ability standards in global agri-food supply chains (e.g., Meemken et al., 2021) or support sustainable public food procurement (e.g., Schleiffer, Landert, & Moschitz, 2022). This could provide the basis to initiate the necessary transformation of the agricultural and food system. In Switzerland, the policy goals formulated in Article 104a provide a constitutional basis for the future development of such a food policy approach that could also be exem- plary for other countries. 5.3. Strengthening cross-compliance Strict cross-compliance measures provide an effec- tive tool to achieve environmental outcomes. While this had also been discussed in the context of the CAP (e.g., Pe’er et al., 2019), the Swiss example clearly shows that the conditionality of payments is effective in reducing negative environmental externalities and increases the provision of positive externalities in agricultural produc- tion. The introduction of the proof of ecological perfor- mance as cross compliance measure in Switzerland has had a leveraging effect on the environmental perfor- mance of Swiss agriculture (Herzog et al., 2008). Stricter conditions for the proof of environmental performance 139Lessons learned and policy implications from 20 years of Swiss agricultural policy reforms: A review of policy evaluations Bio-based and Applied Economics 13(2): 121-146, 2024 | e-ISSN 2280-6172 | DOI: 10.36253/bae-14214 could, under certain market and production scenarios, actually contribute to the better achievement of envi- ronmental targets with little reduction in farm incomes (Schmidt et al., 2019). However, there are also critical aspects that need to be discussed in this context. Increasing production standards via cross-compliance measures might cre- ate leakage effects i.e. some stricter regulations would increase the number of non-complying farms—that is, farms that do not receive direct payments but also do not comply with cross-compliance regulations; (Schmidt et al., 2019). While the overall strong support of agriculture in Switzerland attenuates this risk to a certain extent, since farms would lose a considerable amount of their income share, this would be more pressing in countries with lower overall support. This implies that command and control instruments could replace cross-compliance measures, but their implementation would certainly cre- ate more opposition in the agricultural sector (Erjavec & Erjavec, 2021). In addition, it could also create leak- age of negative environmental effects to other countries if imports were to increase due to the stricter regulation (Bystricky, Nemecek, Krause, & Gaillard, 2020). Final- ly, our review does not provide a direct comparison of cross-compliance measures between Switzerland and other countries. While some studies have looked at cer- tain commonalities and differences (BAFU, 2023; Baur & Nitsch, 2013; Nitsch & Osterburg, 2005), the extent to which Switzerland, through its experiences with cross- compliance, could serve as a role model for other coun- tries would certainly need additional research. 5.4. Supporting differentiation The targeting and tailoring of policy incentives in space, time and across farm types allows for the trans- parent and efficient support of public goods provided by the farming sector. The Swiss case shows the advantages of such policy designs that try to implement the idea of “public funding for public goods”. This allows us to dif- ferentiate between regions with different production conditions, which is a prerequisite for the successful sup- port of local public goods provided by agriculture, such as landscape maintenance and biodiversity conservation (Gawith & Hodge, 2019; Navarro & López-Bao, 2018). In addition, the high degree of targeting and tailoring (in combination with the cross-compliance measures) in the Swiss direct payment system enables attenuation of the tendency of adverse selection into voluntary agri- environmental programmes, which is key for economic incentives for public good provision (e.g., Sven Wunder, Börner, Ezzine-de-Blas, Feder, & Pagiola, 2020). A step forward in payment differentiation would be to extend the use of results-based incentives (i.e. pay- ing farmers for achieving targets and not for certain aspects of management). Recent studies have shown a promising effect on the effectiveness and efficiency of a more widespread use of such results-based agri-envi- ronmental schemes in Switzerland (e.g., Huber, Späti, & Finger, 2023; Huber et al., 2021; Kreft, Finger, & Huber, 2023; Mack et al., 2020; Wuepper & Huber, 2022). These schemes would also enable farmers to use their own dis- cretion over how to achieve outcome goals (e.g., Ehlers, Huber, & Finger, 2021). The flipside of increasing targeting and tailoring to achieve efficiency gains is more complex systems with potentially high administrative burdens (e.g., El Benni et al., 2022). Here, the use of digital technologies and the digitalisation of entire agricultural policies plays a key role (Ehlers et al., 2022; Ehlers et al., 2021). This could not only reduce the administrative burden but also create new opportunities to measure the outcomes of instruments and thus establish results-based or collec- tive policy schemes that do not have to rely on controls on individual farms. 6. CONCLUSION There are four implications from these Swiss experi- ences for policymakers and researchers alike. First, effi- ciency must be increased to re-allocate funds towards programmes that effectively support the provision of public goods or reduce negative externalities. Second, the coherence of different policy programmes is key. Increasing funds for public goods might be a neces- sary condition for a more sustainable agricultural sec- tor, albeit one that is not sufficient. The Swiss case shows that the coordination of policies along value chains and across sectoral policies and stakeholders (i.e. in the sense of a “food system policy”) is indispensable for mak- ing agriculture and food production more sustainable. Third, cross-compliance measures (i.e. minimal econom- ic, environmental, and social standards) for receiving governmental support have an important leverage effect. Even though we observed that setting these standards can lead to political conflicts, they have made a decisive contribution to improving the environmental perfor- mance of Swiss agriculture. Fourth, the examination of Swiss agricultural policy suggest that some environmen- tal targets can be achieved while allowing for windfall gains from farmers’ provision of environmental public goods. Our conclusion is not that other countries should also apply programmes with low additionality, espe- 140 Bio-based and Applied Economics 13(2): 121-146, 2024 | e-ISSN 2280-6172 | DOI: 10.36253/bae-14214 Robert Huber, Nadja El Benni, Robert Finger cially given the fact that they might face much stricter budget constraints, but a carefully differentiated agri- environmental policy programme that focuses on land- scape, biodiversity, animal welfare and ecosystem servic- es should also allow for maintaining economic viability and rural incomes. Our review and the derivation of the lessons learned imply two important research gaps. First, more stud- ies that effectively provide scientific evidence for poli- cymakers are needed (El Benni, Grovermann, & Finger, 2023). Special emphasis shall be on scientifically sound approaches for policy evaluation, including increased attempts to estimate the causal effect of policies. This is often hampered, however, by the complex regulatory environment and the many interactions between pro- grammes and instruments that are often introduced at the same moment in time. Second, future research could focus on the transferability of these lessons, espe- cially with respect to the specific effect of policy mixes and how an integrated policy framework could alleviate trade-offs in the joint provision of food and ecosystem services. Our review is context-specific, and we can- not draw direct implications for other countries (e.g. for countries with lower financial resources to support agriculture). However, the implications from the lessons learned in Swiss agricultural policy have been mirrored in many ongoing proposals on how to improve the CAP (e.g., Guyomard et al., 2023; Kelemen et al., 2023; Pe’er et al., 2020). 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