Agriculture and rural development

Integrating environmental concerns into the CAP

Integrating environmental concerns into the CAP

Agriculture and environment
Integrating environmental concerns into the CAP

The Common Agricultural Policy has evolved over time. The CAP has been increasingly adapted for integrating environmental concerns and to serve sustainability purposes better.

General principle

The integration of environmental concerns into the Common Agricultural Policy is based on a distinction between:

  • ensuring a sustainable way of farming by avoiding environmentally harmful agricultural activity
  • providing incentives for environmentally beneficial public goods and services.

For ensuring sustainable agricultural activities, farmers are obliged to respect common rules and standards for preserving the environment and the landscape. The common rules and standards are mandatory and form the very basis for ensuring that agricultural activity is undertaken in a sustainable way. These rules and standards form the "reference level" up to which the costs for complying with these obligations have to be born by the farmer, according to the "Polluter-Pays-Principle".

However, environmental objectives often go beyond what we can expect farmers to deliver by respecting compulsory legislation. If we want farmers to engage voluntarily in action to enhance the environment beyond the mandatory requirements, we have to provide appropriate incentives. After all, we have to take into account that, beyond their obligations, farmers employ their own private resources and factors of production to deliver environmental public goods and services which are of interest to the wider public and society. Where farmers are remunerated for voluntarily engaging in environment-related activities, we speak about  the "provider-gets-principle".

The Common Agricultural Policy reflects the two principles, the "polluter pays principle" and the "provider gets principle", in integrating environmental concerns into the policy via two mechanisms:

Linking the respect of selected statutory requirements (Cross-compliance) to most CAP payments and sanctioning non-compliance by payment reductions. 

Paying for the provision of environmental public goods and services going beyond mandatory requirements (Agri-environment measures).


CAP measures contributing to environmental integration

Since 1992, the CAP has progressively been adapted to better serving the aims of sustainability, including environmental protection. This development became manifest in a reform process designed to moving from price and production support to a policy of direct income aid and rural development measures.

Today making the CAP compatible with market requirements goes hand in hand with environmental integration with the latter being reflected via four types of measures:

  • Measures targeted towards objectives such as market stability or income support having positive secondary effects on the environment or contributing to maintaining environmentally beneficial structures or types of farming (e.g. LFA payments).
  • Measures targeted towards objectives such as income support, designed to contribute to the enforcement of mandatory environmental requirements and the polluter pays principle (e.g., decoupled payments in combination with cross-compliance).
  • Measures targeted towards encouraging the provision of environmental services on a voluntary basis (agri-environment measures).
  • Measures targeted towards facilitating compliance with compulsory environmental requirements (e.g., "meeting standards" measure) or compensate the relative economic disadvantage resulting from a region-specific pattern of environmental requirements (e.g. Natura 2000 and Water Framework Directive)


A political commitment

Since the 1990s, EU heads of government have consistently endorsed action to develop more environmentally-sensitive farming when they met to set EU policy guidelines in the European Council. Key steps in this process were:

  • Treaty of Amsterdam (July 1997)
    Article 6 highlights the need for integrating environmental protection requirements into the definition and implementation of all Community policies, with a view to promoting sustainable development.
  • Cardiff European Council (June 1998)
    Marked the beginning of the so-called Cardiff process, where successive European Councils have reaffirmed the commitment to integrate environment and sustainable development concerns into all EU policies and to develop appropriate indicators to monitor such integration.

Two major steps in this process were the Helsinki and the Göteborg European Council.

  • Helsinki European Council (December 1999)
    Adopted a strategy for integrating the environmental dimension into the CAP. The strategy indicates specific integration objectives for biodiversity and landscapes, water, soil and land use, climate change and air quality.
  • Göteborg European Council (June 2001)
    Adopted the EU Sustainable Development Strategy, which requires that the economic, social and environmental effects of all policies have to be taken into account in decision-making.

The Sixth Community Environment Action Programme provides the environmental component of the EU Sustainable Development Strategy. The Programme constitutes the framework for EU environmental policy for the period 2002-2012.


Key terms as regards the CAP and environment

Polluter-Pays-Principle - Avoiding environmental damage

The Polluter-Pays-Principle states that the polluter should bear the costs of avoiding or remedying environmental damage. Generally, farmers have to ensure compliance with mandatory national and European environmental standards and respect the basic mandatory standards forming part of the cross-compliance regime at their own costs. Non-compliance with mandatory requirements is subject to sanctions.

Provider-Gets-Principle - Provision of environmental services

The Provider-gets-Principle is described as remunerating voluntary environmental commitments going beyond legal requirements. For the CAP, this principle is taken up via agri-environment payments which encourage farmers to sign up for environmental commitments beyond the reference level of mandatory requirements. Agri-environment payments shall cover the costs incurred and income forgone as resulting from voluntary environmental commitments.

Reference Level – Base Line

The reference level or base line represents the demarcation between environmental requirements with compliance costs falling on the farmer and those measures that offer farmers a remuneration for environmental commitments. In line with the internationally agreed definition of the polluter pay principle, the reference level is represented by mandatory environmental standards, resulting from environmental legislation or cross-compliance requirements. Beyond this reference level, agri-environment payments can be applied.

Public Goods

A public good is a good that, even if it is consumed by one person, is still available for consumption by others. As the individual readiness to pay for public goods is frustrated by free-rider options of others, markets do not function with respect to ensuring a satisfactory supply of goods. Thus, the delivery of public goods, in line with society's demand, requires political action. On the supply side, agriculture can provide for public goods such as maintaining attractive, cultivated landscapes, contributing to the cultural heritage of regions or enhancing the environment.


Assessing the integration process

In order to be accountable, policy outcomes need to be assessed against declared objectives. Also the process of integrating environmental concerns into the Common Agricultural Policy needs regular assessments. In the EU, an elaborated approach towards regular policy evaluation has been established at European, national, or regional level.

Assessing environmental integration is a difficult exercise that must identify the state of the environment, the interaction between agriculture and environmental outcomes, as well as other intervening factors such as general market trends, technology development, and weather events.

Specific agri-environmental indicators are a helpful tool for the policy assessment as they capture well trends and developments over time. Agri-environmental indicators need to be filled with concrete quantitative data. Furthermore, policy-relevant context information is needed in view of arriving at meaningful policy conclusions.

Some agri-environment indicators form also part of the Common Monitoring and Evaluation Framework for Rural Development. The evaluations of the Rural Development programmes look in detail into the impacts of the policy on the environment.