Supporting Greening with Agri-Environmental Measures: Improvement or rather a waste of money?

The concept of Greening of Direct Payments and more specifically the Ecological Focus Area (EFA) are going into their second year of implementation. I will discuss the pragmatic option to additionally support EFA by agri-environmental measures (AEM) in order to improve effectiveness of EFA. The experience in Germany do not deliver strong arguments for this option. The advantage of this option is the application within the existing CAP-framework.

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One effective EFA-option: Flouring strip with phacelia in Lindau, South Lower Saxony

The uptake of effective EFA-options in 2015 was very poor: Landscape elements, buffer strips and fallow land together contributed to 20% of EFA-area in Germany and 25% in the whole EU (figures before weighting factors and excluding figures from France, see my last post here). After the first year of learning and getting along with administrative restrictions, it is unclear whether we will observe an increase of effective EFA-options or not. Beyond the general recommendation to abolish Greening and to use the resources for agri-environmental schemes, we might think about options within the existing Greening-framework. And one of these options are the registration of existing agri-environmental measures (AEM) as EFA-option and thereby improve the effectiveness and focus of EFA-options.

In Germany, agri-environmental measures (AEM) are designed by the federal states (Bundesländer) and additionally supported by the national government. If the federal states want to get financial support form Berlin, the need to adjust their AEM to the regulatory national framework called “Joint Task for the Improvement of Agricultural Structure and Coastal Protection (GAK)“, which sets the general rules for the support by the national government. One rule is, that the payment has to be reduced, since part of the environmental service is already paid by the greening payment. Besides this, the rules have to go beyond the EFA-rules. Within the German framework GAK, the option to support EFA by agri-environmental measures or, vice versa, to register AEM as EFA is given for several EFA-options, as described in the next table 1:

Table: Payments in agri-environmental schemes and reduction rate due to registration as EFA in Germany

Table1a

Note that there is always the problems of ‚double funding‘, which is forbidden by EU-law: Services cannot be paid twice. However, the rules of the agri-environmental measures are more detailed and strict and the EAM-payment is reduced (as displayed in tab. 1), therefore the services are higher and therefore the EU-Commission accepted the programs by the German states. Following a question of Alan Matthews, the way I put this option in this post is probably not very precise in legal sense. The legal logic is rather the other way: Farmers participate in the agri-environmental measure (AEM) and can register their measure as EFA. And if they do, they receive a reduced payment.

The agri-environmental programs of the federal states show that only some German states are using this additional support and only for some of the EFA-options. This creates a very heterogeneous picture, which is displayed in table 2:

Table 2: Table: Additional support of ecological focus area by agri-environmental programs in the federal states of Germany.

The table shows that some federal states use this additional option extensively like Lower Saxony, Bavaria and North Rhine-Westphalia, Rhineland Palatinate and Saxony-Anhalt (all with three options) and some East-German states like Saxony and Brandenburg, but also Saarland and Hessen don’t use this option at all. Some of the options are more strongly supported, like buffer strips (in 9 states) and nitrogen fixing crops (in 5 states with payment), and on the other hand fallow land is only supported in two states, and the forestry options are not supported at all.

The key question here is on the effect of this additional support. We might very simple look on the figures of the states, which use supporting options and find out, whether we can determine higher shares of the respective option. However, the answer to this question is not as easy, since this goes to more general issue on how farmers decide on the choice of EFA-types. And here we see conflicting determinants of decision, which probably overlap with the incentive of agri-environmental measures. Besides this, we know the existing options, but we do not know (so far) to what extent farmers use the specific option and participate in agri-environmental measures eligible for EFA.

To the more easy and obvious question, whether we can directly discover statistical evidence, I will give a try. This is done, by separating the EFA-figures of the federal states with additional support and without. The result is displayed in table 3:

Table 3: Impact of additional support by agri-environmental measures on EFA uptake
(The figures indicate shares of the respective option in states with and without additional AEM-support)

First of all, the main issue is, whether we can observe a higher uptake of the measures, which are additionally supported. This is the case of buffer strips, catch crops and nitrogen fixing crops with a higher share within the states with support. However, the rest of the results is rather puzzling: In many federal states with support, the share of the supported EFA-options is lower or even substantially lower like in the case of fallow land. And on the other hand, the additional of Nitrogen fixing crops and catch crops is marginal with 20 and 75 €/ha, therefore here the factors leading for an high uptake might be others.

For instance, in Lower Saxony, which supports 4 options, the participation rate is not 100% clear. In 2015, 10.866 of 39.500 farms in Lower Saxony were working under agri-environmental schemes (including the organic farming support and all grassland-programs), which is just 27% of all farms. To figure out an impact, we would need to know, how many farms use the combination of EFA and EAM, because with low participation rates AEM can’t simply exert any impact on EFA. And this was probably the case in many federal states displayed here.

Finally, only buffer-strips we might observe a small impact, for the rest of the options AEM are not leading to high rates of uptake in absolute terms. We might conclude, that the additional incentive of AEM is outweighed by other factors in the decision process.

Coming to the conclusion:  The advantage of this option is the comparatively easy application within the existing CAP-framework. So states can decide to take this option and improve the effectiveness of EFA. If we don’t want to loose five years for biodiversity, we might still want to consider this option, even if this has a number of drawbacks like double funding and even more complicated requirements: Farmers in this case need to fulfill the requirements of two systems, where sometimes one is already too complicated.

The additional support of AEM is so far rather a theoretical option and the rates of uptake do not give strong arguments for this option. Greening is not effective and highly inefficient. And at the end of the day, with additional support of EFA we take away money from other, much more effective support schemes within the agri-environmental measures, which are essential for the support of biodiversity in agriculture. So the final long-run conclusion is (again) to abolish Greening, shift money into pillar two and to extend agri-environmental measure instead of sticking to the ineffective and inefficient instrument of ecological focus area.

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