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Rural Development

What old-style CAP defenders claim

Rural areas are lagging behind in their economic development and losing population. This endangers Europe’s rural settlement structure and accelerates land abandonment. The CAP should therefore support farming, economic diversification and the quality of life in rural areas.

Rural development is not a smart social policy

Income varies even more strongly between households than between regions. If one is concerned with the unequal distribution of wealth, one should support poor households and not poor regions where rich and medium-income households live as well. This will, as a side effect, also reduce income disparities across regions since more poor households receiving support live in poor regions.

Rural development has little to do with land abandonment

Land with scenic or environmental value can be abandoned in prosperous rural areas. Vice versa, farming areas deemed to have special ecological or social value can be maintained – if necessary through targeted payments – even in areas where the population is declining and the economy lagging. So the objective of keeping land under cultivation cannot justify policies to enhance rural growth, employment, and quality of living.

Decentralized settlement has its drawbacks

It is questionable whether governments should support decentralized settlement structures at all. Some people may prefer a more decentralized settlement structure in their country, while others appreciate having larger thinly populated areas and more wilderness. This is a matter of taste and it is far from clear that a majority of citizens has strong preferences for a decentralized settlement structure. It must also be taken into account that rural settlement increases costs for infrastructure and public services. And it contributes to environmentally harmful traffic.

Agriculture is too narrow for rural development

In sum, the case for rural development - whether to reduce income disparities, prevent land abandonment or maintain rural settlements - is weak. In any case, rural development should not resort primarily to agricultural policies. Agriculture constitutes only 13% of rural employment and 5% of rural value-added in the EU – with figures much lower in many rural regions, especially in the old member states. Efficient approaches to promoting rural development would be non-discriminatory across sectors. This is the case with investment into infrastructure and education.

The CAP is not targeted at poor regions

Another argument against using agricultural policies for rural development support is that they are not targeted at the areas with the greatest needs. Income and employment levels differ significantly across rural areas – and many rural areas are much better off than de-industrializing cities. Similarly, birth, death, and migration rates vary across rural areas – and many regions have seen their population grow. However, many CAP payments, such as the Single Farm Payment, ignore these differences: they benefit the regions with the highest (current or past) agricultural output instead of those with the greatest needs.

Rural development is not an EU responsibility

Finally and decisively, if countries wish to subsidize rural development, this is a national choice that will not significantly affect European welfare. Rural development is not a European public good.

Conclusion

The idea of rural development is appealing at first sight. Helping poorer regions seems fair and reasonable. But, upon closer examination, the reasons given for rural development turn out to be wanting. Income disparities should be addressed at the household level. Land abandonment can be better avoided through targeted agri-environmental payments. And more decentralized settlement structures are not necessarily preferable. In any case, rural development should not be promoted through agricultural policies but through growth policies that are not biased in favor of any sector. Last but not least, the objectives at stake are national and do not warrant EU money.