AgriFood-WP 2013:5

Farm-level employment and direct payment support for grassland use: A case of Sweden

By evaluating the employment effects of the grassland subsidy, introduced in Sweden in 2005, this study provides empirical evidence of the importance of taking land use practices into account. The subsidy was included as a part of the decoupled direct payments to the farmers. Using farm-level data (FADN) for the period 1998 to 2008, this study finds that the grassland subsidy had a large positive effect on annual work hours, but that the production and investments were not affected. Thus, more rigorous eligibility requirements altered land use practices and induced farmers to produce environmental benefits.