Agriculture is an economic activity that contributes significantly to the gross national
product of a country, securing at the same time the viability of the rural sector and the
social coherence. On the other hand, it can generate an environmental externality,
especially concerning water resources that, in the name of higher crop productivity, are
often overexploited or polluted. Most agricultural decision analysis studies are primarily
focusing on farmers’ welfare optimization. Therefore, this externality is only examined as
a negative environmental effect of different farming and agricultural policy scenarios.
However, a proper decision analysis in the field of agricultural policy should be guided by
the goal of finding a unique “optimal” solution out of a great number of possible
alternatives that arise from a complex integrated socio-economic and environmental
system, which incorporates significant conflicted interests.
The main objective of this paper is to create, apply and evaluate a model that aims at the
simultaneous maximization of farmer’s welfare and the minimization of the consequent
environmental burden. More specifically, weighted and lexicographic goal programming
techniques are employed. These techniques are implemented on a representative area in
the Loudias River Basin in Greece to seek for a compromising solution - in terms of area
and water allocation (under different crops) - resulting in figures that will come as close as
possible to the decision maker’s economic, social and environmental goals.
The information that is incorporated into the selected goals includes farmers’ welfare,
characterized by securing income and employment levels, as well as environmental
benefits, such as water resources protection from excessive application of fertilizers and
from unsustainable use of irrigation water. Several weights or priority levels can be
assigned on these goals, according to the intentions of the decision maker, that are likely
to differentiate the final allocation of resources. Hence, the analysis is undertaken under
different policy scenarios (e.g. environmental friendly, farmers’ friendly and compromising
scenarios) and the results are well elucidated. In addition, it is further examined the
different final outcome that may arise when the targets of the various economic and
environmental goals are relaxed in order to reduce the information bias from the decision
maker as well as to better perceive the indirect relationship between some competitive goals.
Budget of the EU and Common Agricultural Policy for 2014-2020 in the light of the polish interests