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Beyond the conventional role of providing food, rice farming in European Mediterranean wetlands performs a valuable non-marketable function related to the provision of environmental services. Rice and biodiversity are jointly produced, so that provision of flooded-rice-fields based environmental services depends crucially on private profitability of rice farming. Recent reforms of the Common Agricultural Policy (CAP) and increasing access of third party countries to the domestic European market are challenging the competitiveness of European rice growers. This paper combines conventional competitiveness indicators and non-parametric efficiency analysis to ascertain the economic profitability of rice cultivation in the Albufera Natural Park (Eastern Spain). Our main results are as follows. First, the current competitiveness of rice farming in this highly valued agro-ecosystem depends crucially on CAP support. Second, if rice growers were performing efficiently, short-run competitiveness could be achieved without CAP support. Third, the current scheme of environmental payments would be sufficient to bring about the long run competitiveness of efficient farmers, thus guaranteeing the survival of a wealth of biodiversity associated to the Albufera wetlands. Finally, we also find that outsourcing certain growing tasks to external service firms improves the chances of rice farms working efficiently.

Farming Efficiency and the Survival of Valuable Agro-Ecosystems: A Case Study of Rice Farming in European Mediterranean Wetlands