Engaging environmentalists

One problem in building a grand reform coalition is that environmentalists promote a big CAP budget to support environmental objectives, whereas businesses, tax payers and finance ministries seek to cut waste and reduce CAP spending. It is therefore crucial to convince environmentalists that fundamental CAP reform offers more to them than what could be achieved by aligning with the rural development community and small-scale farmers.

A look at the numbers shows that the size of the CAP should not drive a wedge between environmentalists and other reformers. Only about € 5 billion per year have been allocated on average to primarily environment-oriented programs in the 2007-2013 second pillar budget. Moreover, many of the presumably ‘green’ payments are not efficiently targeted at environmental protection. Hence, even a radically downsized CAP budget of € 20 billion that is focused on European (environmental) public goods would offer environmentalists a multiple of the current ecological benefits, while also removing the ecological harm caused by today’s CAP. Environmentalists can be sure that the future CAP budget will be large enough to serve their needs – the real issue is to use as much of the money as possible for environmental purposes rather than for farm income or production. Businesses, tax payers and finance ministries are therefore natural allies of environmentalists. Together they all benefit from a lean and green CAP.

Still, these other stakeholders may want to make an extra step towards environmentalists’ positions. This may include particularly strong increases in research and development for more sustainable farming and a generous definition of the European character of environmental goods, so that more money becomes available for targeted environmental programs.

Another problem in building a grand reform coalition is that some environmentalists believe in certain ideas that are intuitively appealing but not supported by empirical evidence. It is therefore necessary to produce and disseminate research that demonstrates the ecological merits of fundamental reform.

Loss of wildlife habitats as a result of land abandonment is a worry for environmentalists. Yet, economic models show that reduced income support is unlikely to lead to massive abandonment of high nature value farmland. Most current subsidies go to high-intensity farming in low nature value areas and not to the extensive farming in high nature value areas that environmentalists wish to preserve. Agri-environmental payments targeted at maintaining extensive farming in areas of high nature value that are actually threatened by abandonment should be the preferred policy – and they would require much less money than the current blanket subsidies.

For many environmentalists, small is beautiful. They are concerned about CAP reform that accelerates structural change towards bigger farms. Accordingly, they tend to side with small-scale farming associations that claim income support directed to small farmers and farm labor. However, small-scale farms are not necessarily better for the environment (larger farms are quicker to switch to new, more sustainable farming techniques) and the advantageous features of small farms (notably small field sizes with hedge rows in-between) can also be had with large farms if agri-environmental payments reward these features.

Some environmentalists fear that cuts in farm income support will drive farmers to produce more intensively to make a living. However, farmers’ decisions about the use of capital goods in production (such as fertilizer, irrigation and greenhouses) depend primarily on agricultural prices: higher prices make the use of more capital goods profitable. If tariffs, export subsidies, intervention buying and the like are removed, agricultural prices will fall and farmers will produce less intensively.

Another concern is that with less income support to cushion them against international competition, European farmers might resist future tightening of environmental minimum standards more vigorously. Experience shows that farmers resist environmental regulation anyway – even with the substantial income support they are currently receiving. In future, some of the CAP money freed up by reform could be used to facilitate tighter regulation: farmers that carry a special burden may be compensated (see ), and one might also think about a more general temporary aid to farmers for meeting any new regulatory requirement.

Finally, environmentalists often favor local production and consumption cycles, but domestically grown food does not automatically have a better carbon/ecological footprint than imported food. Climatic conditions may be more favorable abroad and farming techniques may be less intensive due to lower labor costs, thus energy savings in production may more than offset the energy used for transportation. Furthermore, trade assumes an ever more important function in balancing water availability: some countries should import more food and exert less strain on their scarce water supplies. The right approach is to tax energy and other harmful effects of production and transportation appropriately – and then let trade determine the best location for each product.