Conditions for Enhancing Second Pillar Payments that are Targeted at Public Goods

Polluter pays principle

Subsidies should only be paid where they are more efficient or legitimate than raising legal minimum standards or imposing taxes. The general principle that polluters pay for the damages they cause is also applicable to agriculture. For instance, it may be preferable to tax agrochemicals rather than paying farmers for using them less.

Subsidiarity

Not every public good automatically deserves EU funding. Only those public goods whose benefits spill across borders should receive EU support. And this EU support should be responsive to the degree of cross-border spillovers, that is, member states’ co-financing rates should be differentiated across programs.

EU oversight

Only efficient programs should be subsidized. Often, excessively high sums are paid for minor environmental benefits, while more effective environmental schemes are poorly funded, so that few farmers accept them. Better targeting and tailoring payments to public goods will require tighter oversight of member states by the European Commission.