What old-style CAP defenders claim
The CAP is needed to promote the manyfold environmental benefits of agriculture for which farmers are not remunerated on the market. Agricultural production can preserve open spaces, enhance scenic variety, and maintain traditional landscape characteristics that carry cultural significance. Similarly, agriculture can promote biodiversity, for instance by offering a habitat to species that depend on (traditional) farming. It is not only efficient but also fair to pay farmers for these services to society.
The ecological costs of stimulating agricultural production
It is certainly true that agricultural production has positive side effects for society. However, there are also negative effects. Agriculture can lead to water, air, and soil pollution; release of greenhouse gases; water and soil depletion; and the loss of biological diversity as a result of environmental degradation and monoculture. Simply stimulating agricultural production tends to do more harm than good to the environment.
The ecological ineffectiveness of the Single Farm Payment
Admittedly, the Single Farm Payment (SFP) is subject to cross-compliance: farmers need to adhere to certain environmental standards if they want to obtain income support. These requirements overlap with compulsory obligations, so that many farmers do not have to undertake any action beyond respecting the law. Furthermore, member states are lax in controlling and enforcing cross-compliance, finding, for example, not a single infringement in thousands of controls for important conditions. This makes it unreasonable to expect significant environmental benefits from the SFP.
The ecological damages of many second pillar subsidies
Many second pillar subsidies are damaging the environment. The environmental consequences of subsidies are not thoroughly assessed, and the available evidence is not stringently applied to mitigate environmental harm of EU-funded programs and to reject ecologically irresponsible funding proposals. The EU still pays for building greenhouses that impinge upon wildlife sanctuaries and for drainage of wetlands.
The meager funds for agri-environmental programs
In the 2007-2013 second pillar budget, about € 5 billion per year have been allocated on average to primarily environment-oriented programs. This amount will increase somewhat during the next years but not greatly exceed 10% of the entire CAP budget.
The poor implementation of agri-environmental programs
It gets worse. Many of the presumably ‘green’ payments are not efficiently targeted at environmental protection. Ministries of agriculture consciously design schemes to channel money to farmers rather than to create the greatest value for the environment. In several countries, for instance, farmers get more money for fulfilling a few environmentally friendly farming practices that do not impose major costs than for producing according to much stricter organic standards.
The current CAP cares little about environmental protection. It contains many ecologically harmful elements, such as subsidies coupled to production and for farm modernization, as well as the wasteful Single Farm Payment. Furthermore, the few resources dedicated to agri-environmental payments are spent poorly. This is regrettable because environmental services provided by agriculture and insufficiently remunerated on the market are the strongest reason for farm subsidies. In the future, the CAP should spend more money on improved agri-environmental programs.
But not all agri-environmental payments qualify for the CAP support: only the provision of environmental public goods that spill across national borders should be subsidized by the EU. For public goods that are enjoyed mostly within the subsidizing member state, national authorities are in a better position to pursue local preferences with locally responsive policies that are financially more responsible. For instance, most benefits of a diverse, traditional, well-kept landscape will be reaped within the country – by direct enjoyment, as an advantage to attract qualified human resources, or through tourism. Landscape-related expenditures should therefore be covered mostly or exclusively by the member states.