The contribution of the EU Common Agricultural Policy to protecting biodiversity and global climate in Europe

1. The contribution of the EU Common Agricultural Policy to protecting biodiversity and global climate in Europe By Dr. Eckard Rehbinder, Emeritus Professor of Economic and Environmental Law, Research Centre for Environmental Law, Goethe University Frankfurt, Germany

2. 1. Introduction - Ambivalent role of agriculture: Source of increase of biodiversity and major threat to biodiversity and climate stability - Synergetic effects between the impairment of biological diversity and climate stability

3. 2. Major features of the EU Common Agricultural Policy (CAP) In Europe, the degree to which agricultural subsidies take account of environmental concerns, in particular biodiversity and climate protection, is of major significance. Recent CAP revisions: “First pillar”: EU Regulation on Direct Payments (Regulation No. 73/2009): - Substitution of direct income payments for the previous subsidisation of prices and production with their adverse impacts on biodiversity and climate - Introduction of explicit environmental elements (“Cross Compliance”)

4. 2. Major features of the EU Common Agricultural Policy (CAP) Recent CAP revisions: “Second pillar”: EU Regulation on Rural Development (Regulation No. 1698/2005, as amended by Regulation No. 74/2009): - Agri-environmental measures - Compensation in disadvantaged areas Both elements of the new “green” CAP: important incentives for protecting biodiversity and global climate on agricultural land.

5. 3. Cross compliance as an instrument to protecting biodiversity and global climate Regulation on Direct Payments: - Direct income payments depend on compliance with certain EU environmental laws or requirements for keeping agricultural land in a “good agricultural and ecological condition” (“Cross compliance” – CC)

6. 3. Cross compliance as an instrument to protecting biodiversity and global climate3.1 Compliance with administrative regulation - Certain provisions of environmental directives

7. 3. Cross compliance as an instrument to protecting biodiversity and global climate3.2 The requirement of maintaining land in a “good agricultural and environmental condition” - Independent conditionality for granting direct income payments Conservation of grassland - CC only requires the maintenance of the existing ratio of land under permanent pasture - Does not ensure the permanency of grassland at the same location - Only a decrease by 10 percent triggers individual prohibitions and re-conversion obligations of farmers

8. 3. Cross compliance as an instrument to protecting biodiversity and global climate3.2 The requirement of maintaining land in a “good agricultural and environmental condition” Protection of wetlands - Protection of wetlands - Insufficient - Establishment and/or retention of such habitats are optional Intensively cultivated agrarian landscapes - Requirements for the retention of landscape features - But a certain margin of discretion for member states (protection “where appropriate”) - Member state implementation is quite diverse

9. 3. Cross compliance as an instrument to protecting biodiversity and global climate3.2 The requirement of maintaining land in a “good agricultural and environmental condition” Other areas - No mandatory biodiversity-friendly agricultural cultivation and grassland utilisation methods - No obligations with respect to the keeping of cattle

10. 4. Subsidisation under the Regulation on Rural Development as an instrument for protecting biodiversity and global climate Regulation on Rural Development: - Special payments for agri-environmental measures - Compensation for production disadvantages in naturally disadvantaged areas and protected habitats Article 39(3) of the Regulation: - Voluntary commitments must go beyond the CC requirements of the first pillar and mandatory requirements on the use of fertilizers and pesticides (“additionality”)

11. 4. Subsidisation under the Regulation on Rural Development as an instrument for protecting biodiversity and global climate In the past: - The subsidization regime focused on reducing the intensity of using grassland and cultivating arable land Article 16a of the Regulation (introduced by Regulation No. 74/2009): - New programme for the protection of biodiversity, water resources and climate - Aim: Earning “double dividends” from measures that both protect plant diversity and reduce greenhouse gases - Financed by “progressive modulation”

12. 4. Subsidisation under the Regulation on Rural Development as an instrument for protecting biodiversity and global climate Role of member states: - Specified by the member states/regions on the basis of national and regional strategies There are variances as to the financial equipment, the scope of the programme, the kind of measures to be subsidized, the ecological ambition and the type of areas covered.

13. 4. Subsidisation under the Regulation on Rural Development as an instrument for protecting biodiversity and global climate Examples of measures: - Reduction of the intensity of use of grassland - Reduction of the cattle stock per hectare - Management of sensitive or marginal grassland and of ecologically or climatically valuable (although not formally protected) land - Maintenance or promotion of biodiversity - Promotion of organic farming - Renunciation to synthetic fertilizers and chemical plant protection products

14. 4. Subsidisation under the Regulation on Rural Development as an instrument for protecting biodiversity and global climate Important gaps: - Measures that are relevant for climate protection - Example: Ecological remediation of denaturalised areas such as drained wetlands and moorland is neglected

15. 5. Evaluation5.1 Available options - Stiffening administrative regulation - Enrichment of the CC requirements - Improved financing of agri-environmental measures The choice among these options should be governed by the generally recognised selection criteria.

16. 5. Evaluation5.2 Stiffening administrative regulation? Arguments in favour: - Social responsibility of farmers - Equal treatment of agriculture and industry - Polluter pays principle Arguments against: - Strong conflicts between protective goals and economic interests of farmers - Long subsidisation history of agriculture - Suggestive force of combining the pursuance of income and environmental policies by one and the same instrument - Large number of actors, high variance of activities and natural conditions

17. 5. Evaluation5.2 Stiffening administrative regulation Biodiversity losses are not amenable to high political mobilisation, and even in the field of climate protection measures are presently being preferred that promise an economic dividend besides the ecological one.

18. 5. Evaluation5.3 The role of social responsibility and the polluter-pays principle in agricultural subsidisation schemes - The decision as to the conditions under which environmental aids are granted to farmers should be guided by the polluter-pays principle - The structure of these aids should reflect the need to delimit social responsibility for sustainable agriculture from legitimate remuneration of environmental services - Therefore, CC as first choice

19. 5. Evaluation5.4 Environmental enrichment of Cross Compliance Advantages: - Large extent of coverage - High obligatory force - Enforcement problems manageable Proposed measures: - Protection of land under pasture: On-site protection of ecologically valuable grassland and grassland that has a high content of organic substances - Reinforcement of the conservation of landscape features, especially with respect to wetlands and moorland - Minimum standards for cattle-keeping, spraying of synthetic fertilisers and harvesting grass from meadows not under pasture

20. 5. Evaluation 5.4 Environmental enrichment of Cross Compliance Limitations: - CC concept only ensures a generalised minimum protection - Establishment of regional CC standards or attachment to landscape planning legally permissible and advisable - The use the CC concept is problematic where positive obligations shall be imposed or individualised solutions are necessary or more appropriate

21. 5. Evaluation 5.5 Improvement of subsidisation of environmental services - Better accommodation for concrete natural conditions/ requirements and individual differences in the loss of earnings by farmers Advantages: - Conformity with the modern paradigm of the “cooperative state” - Integration of the motivation and knowledge of farmers - Avoidance of expensive errors in the design of solutions

22. 5. Evaluation5.5 Improvement of subsidisation of environmental services Drawbacks: - Voluntarism as an impediment to a coherent conservation policy - Lack of sufficient regulatory means if negotiation fails or the commitments are not adequately executed by farmers - High transaction costs - Problems of financing (level and continuity) - Acceptance by farmers in high yield agricultural areas not ensured and elsewhere decreasing

23. 5. Evaluation 5.5 Improvement of subsidisation of environmental services Fundamental problem: - Environmental effectiveness of subsidisation of activities rather than environmental effects - Effects-oriented subsidisation schemes appropriate at least in selected cases Minimum reform requirement: better target orientation - Stronger consideration of priority problems such as seeking synergies between protection of biodiversity and climate protection - Concentration on areas that are in particular need of environmental improvement

24. 6. Conclusion Although subsidisation schemes aiming at ecologically and climatically sustainable agriculture are far from being a panacea, for the time being they seem to be at least a second-best solution in Europe.