Non-monetary motivations of the EU agri-environmental policy adoption. A causal forest approach

This paper investigates the non-monetary motivations of farmers' adoption of agri-environmental policies. Unlike the monetary (income) motivations, non-monetary drivers can not be directly observed but can be identified from observational data within appropriate quasi-experimental designs. A theoretical justification of farmers' choices is first formulated and a consequent natural experiment setting is derived. The latter admits heterogeneous, i.e. Individual, Treatment Effects (ITE) that, in turn, can be interpreted in terms of more targeted and tailored policy expenditure. A Causal Forest (CF) approach is adopted to estimate these ITEs for both the treated and not treated units. The approach is applied to two balanced panel samples of Italian Farm Accountancy Data Network (FADN) farms observed over the 2008–2018 period and concerns agri-environmental policies delivered through the Common Agricultural Policy (CAP). Results show how heterogeneous the farmers’ response and the associated non-monetary motivations can be, thus indicating room for a more efficient policy design. •Existence and relevance of non-monetary motivations in environmental adoption is investigated.•A theoretical justification of farmers' choices is formulated and a consequent natural experiment setting derived.•A Causal Forest approach is adopted to estimate the Individual Treatment Effects.•The approach is applied to two balanced panel samples of Italian farms over the 2008–2018 period.•Results indicate room for a more efficient policy design in this field.