Multifunctionality and a new focus on externalities

The concept of multifunctionality has been developed to describe the constitutional importance of jointness and externalities for agriculture and forestry. We argue that this notion is not restricted to the primary sector, but that the whole economy is characterised by multifunctionality. In addition, we show that welfare-relevant externalities are not only technological or pecuniary. We also identify psychological, social and human capital externalities. Further, the concept of multifunctionality provides an opportunity to take the individual and social dimensions of externalities into account. Since not all externalities ought to be internalised and since their perception is sometimes rather subconscious, it seems often reasonable to abandon willingness-to-pay studies for more deliberative processes.