Rural areas in the EU represent, according to a standard definition, 91 % of the territory and 56 % of the population. Many of these rural areas face significant environmental and socio-economic challenges. Agricultural practices put pressure on the rural environment, but on the other hand, agriculture and forestry are generating public goods, notably environmental such as landscapes, biodiversity, climate stability and protection against natural disasters. Rural areas are increasingly diversified and rely more and more on secondary and tertiary economic sectors. However, agriculture and food industries directly related still represent a high share of the economy particularly in remote and predominantly rural areas.
The EU's rural development policy aims at meeting these challenges faced by rural areas. The rural development policy for the different financial periods is set up so as to cover issues related to competitiveness of agriculture and forestry, environmental issues and territorial cohesion aspects such as quality of life in rural areas and diversification of the rural economy.
JRC research focuses on the role of agriculture as provider of public goods, on the impacts of rural development policies on all the aspects of rural economies and on the contribution of agriculture to new environmental challenges and green growth.
Public Goods provided by EU agriculture
Agriculture in the EU plays a determinant and positive environmental and socio-economic role by providing a wide range of public goods associated with agriculture, highly valued by society, such as agricultural landscapes, soil functionality or rural vitality.
There are many public goods associated with agriculture. The most significant ones are environmental - such as agricultural landscapes, farmland biodiversity, water quality, water availability, soil functionality, climate stability (greenhouse gas emissions), climate stability (carbon storage), air quality, resilience to flooding and fire; others are more social public goods, including food security, rural vitality and farm animal welfare and health (Cooper et al., 2009). On the other hand, inappropriate agricultural practices and land use can have adverse effects on landscape and the ecosystem services they can provide. The research conducted by JRC aims (i) at analysing how the CAP design and implementation have impacted the rural agricultural landscape; (ii) studying a methodological approach for estimating the society's value of Public Goods produced by the EU agricultural sector; and (iii) analysing how farmers can be encouraged through appropriate policy measures to adopt soil conservation practices.
Assessing the impact of rural development policies on rural and regional economies
The EU Rural Development Policy addresses several challenges related the economy, the environment and the society of rural areas. Assessing ex ante or ex post the impact of such policies implies to cover all the different aspects of rural economies and societies.
Rural economies are diverse: the core of the Common Agricultural Policy measures focus on agricultural and forestry, activities which are more or less important in front of diverse rural secondary and tertiary sectors activities (production of renewable energies, tourism, rural services, etc.). In order to better assess the impact of Rural Development policies, the JRC has set a typology of European rural areas, and furthermore adopted a modelling approach based on regional Computable General Equilibrium (CGE). In the CAPRI-RD project, the regional impact of rural development measures is tested exhaustively at EU level in connection with other PE (Partial Equilibrium) models capturing the evolution of agricultural markets and policies. On a more restricted but more in-depth case study approach, impacts of rural development policies on the respective rural and urban economies of determined small regions of different types are simulated. The impact of local and participatory development approaches is also studied in the context of the Balkans.
Economic impact analysis of agriculture contribution to green growth (climate change, water)
New environmental challenges such as climate change and greenhouse gas emissions or the availability of water are directly affecting agriculture in the EU and in parallel agricultural activity has direct and indirect impact on the environmental issues at stake.
The availability of natural resources constrains the development of agricultural production and markets. In this context, the new environmental challenges such as climate change or water availability imply that the impacts, including in terms of indirect land use changes, of different policy options with regards to the adaptation of agriculture to resources availability, to the mitigation of environmental impacts should be assessed, as well as the contribution of agriculture to green growth.
The JRC is involved in modelling the economic impact on the agricultural sector of climate impacts, adaptation policies as well as various energy, transport and climate change scenarios. The economic impact of climate change mitigation measure is also assessed (e.g. Carbon preservation and sequestration in agricultural soils), as well as the impact of biofuels under different policy scenarios, including on indirect land use changes. Concerning water, the JRC studies the ways to include economic aspects of sustainable water use into the modelling analysis of EU agriculture. For these challenges, one of the main issues is to link bio-physical and economic models to assess the inter-relations between natural resources and economic activity. The impact of a global uptake of innovative low input or organic farming techniques is also studied in the case of the dairy sector, as well as the economic dimension of pesticides use and risk reduction policies, in particular Integrated Pest Management.