J. Lovett; D. Kirby; C. Holmes; T. van Rensburg
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Abstract: Agriculture in the United Kingdom (UK) has undergone a series of shocks in recent years. First the BSE crisis and then a nation-wide foot and mouth disease epidemic. These shocks compounded the problems of an industry with low producer prices and huge subsidy payments through the European Common Agricultural Policy (CAP). The UK government response has been to review the links between farming, the economy and the environment with the release of a major policy document in February 2002 that presses for substantial reform to the CAP and the recommendation that public money should be used for pay for public goods that the public want. If the current system of CAP subsidies based on livestock and crop production are replaced by direct payments for environmental goods and services then this will be a major change in the way that the UK countryside is managed. This paper reviews the economic theory and practice of conservation schemes in the UK. The example of the North York Moors National Park is used to illustrate public perceptions of environmental goods and the economics of sheep farming and grouse shooting. Management agreements developed on 50000 ha of the North York Moors National Park are used to illustrate how conservation objectives can be achieved.