Land abandonment is affecting several areas of Europe, and the issue has since some years become a policy objective. The consequences of land abandonment are however difficult to assess as both agriculture and land abandonment are linked to socio-environmental public goods, but the relationship between public good provision and land use, as well as their societal value, are unclear and debated. Policy such as the Common Agricultural Policy affects land abandonment and public good provision in different ways, by providing income support and targeting the provision of environmental public goods.The objective of the paper is to assess the land use, public good levels and welfare deriving from agricultural production and from the provision of three selected PGs, in three alternative scenarios. In a reference scenario land use allocation is driven by the maximization of agricultural income; we then compare these results with a scenario where land use decisions maximize the societal welfare, hence including the value generated by the three, and with a scenario that simulates Measure 13 of the Rural Development Programme (payment for Areas Facing natural or other specific Constraints). The method used is a land allocation model calibrated for the hill and mountain area of the province of Bologna (Italy), in which the public goods societal values are the results of a choice experiments taken in the Emilia-Romagna region. The main results is that the societal optimum is reached through a substantial change in land allocation (e.g. a strong reduction in land abandonment and an increase in forest areas) and in the composition of the welfare (from private agricultural income toward public good benefits) with respect to the private optimum. Moreover, generic income support reduces land abandonment but also total welfare as it has negative effects through the reduction of carbon sequestration and increase in soil erosion. More targeted policies, that more explicitly connect support to public good provision, have better welfare effects.
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