VI The Impact of CAP Reform on the Environment

The impact of CAP reform on the environment: some regional results

Mark Brady1

This chapter presents the findings of a European Union (EU) project, IDEMA, on the potential environmental impacts of the 2003 CAP reform for a selection of case-study regions. Due to the complexity of the issues at hand and the lack of historical data, the assessment was based on dynamic agent-based modelling with the extended AgriPoliS model. Our results indicate small impacts in relatively productive regions, since land use remains largely unchanged. In marginal agricultural regions, however, decoupling is shown to have a negative impact on biodiversity and landscape mosaic because of the homogenisation of land use that results from land being taken out of production. Existing agri-environmental schemes and national support acted to buffer the full potential impacts of decoupling on landscape values in these regions. The modelled effects of the reform would have been more radical if there had been no link between the decoupled payment and land, i.e. the GAEC obligation.

Characteristic of Europe is its diversity of historical agricultural landscapes that echo a rich cultural heritage, provide semi-natural habitat for a wide range of species, and generate value to society through e.g. recreation, tourism and ecosystem services (Swinton et al., 2007; Benton et al., 2003; OECDb, 2001). These landscapes have evolved over centuries, and are dependent on continued management for their preservation (Scherr and McNeely, 2008). Factors that influence farm profitability and hence production decisions can therefore have profound effects on the landscape and biodiversity.

Over the past 20 years, the Common Agricultural Policy (CAP) has been gradually reformed towards increasing market orientation. In the 1970-80s, price-related support dominated agricultural policies in the European Union (EU), as in other OECD countries. Starting with the MacSharry reform in 1992 and continuing with the Agenda 2000 reform a large share of price support in the European Union was replaced by direct payments per hectare of land and per head of livestock for eligible crops and breeds. The 2003 reform constituted a further and more radical change of European policies for supporting farmers (Andersson, 2004). The central element of the reform is decoupling of direct payments from production via a Single Payment Scheme (SPS), which is paid per hectare of agricultural land. It is paid regardless of whether the farmer produces commodities or not — and hence is independent of the individual farmer’s production decisions — as long as the land is kept in Good Agricultural and Environmental Condition (GAEC).

The reform was intended to make European Union agriculture more competitive and market-oriented, and at the same time to provide support to farmers with less distortion of production and trade. However, in the public debate preceding the 2003 reform, it was argued that a decoupled SPS would lead to substantial abandonment of production in numerous regions and sectors, and an exodus from the most disadvantaged rural areas (Commission, 2003). Given the cultural and environmental values associated with European landscapes, the prospect of reduced agricultural activity was a cause for concern, as manifest in the concepts of the European model of Agriculture and Multifunctionality (Cahill, 2001). This follows from the argument that countryside services are produced jointly with commodities, and hence a decline in production would lead to a concomitant loss in services (Hodge, 2000). Despite this, and the recognition of the existence of multi-functional agriculture in parts of the European Union, there is contention about the dependence of landscape services on subsidies to commodity production (Harvey, 2003).

This paper presents some of the findings of a large EU project, IDEMA2: on the longterm effects (i.e. to 2013) of the 2003 reform on farm structure, landscape mosaic and biodiversity for a cross-section of EU regions. Due to the heterogeneity of agricultural and socio-economic conditions in the European Union, adjustments to decoupled policies and potential landscape impacts are likely to vary widely between regions. To make the assessment feasible, a sub-set of five case-study regions — reflecting some of the diversity of the enlarged European Union — were selected for analysis. These ranged from very extensive northern conditions in Sweden to intensive regions in the Mediterranean. Due to the complexity of the issues at hand and the lack of historical data, impacts are quantified using a spatial agent-based modelling approach which is described below.

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