Upscaling environmental incentives in the Common Agricultural Policy: an ex-ante evaluation method applied with the Farm Accountancy Data Network

Abstract

Agri-environment-climate measures and organic farming support have been the main contractual instruments promoting environment-friendly agricultural practices in the European Union since the early 90s. They are insufficient in reaching significant environmental improvements, in particular because under-funded in comparison with income support instruments. Using French panel data from the farm accountancy data network, we evaluate the impact of a budget transfer from income support to environmental incentives on contract uptake. We estimate the probability of adoption and the acceptable payment triggering this adoption with a generalised Tobit model, and use the estimations to simulate a transfer from direct payments to organic farming support and agri-environment-climate measures budget. Results suggest this mechanism increases adoption. We evaluate several budget allocation scenarios, provide ex-ante elements on farmers’ response to more targeted support towards the delivery of environmental public goods, and how it could help reaching the target of 25% of organic area by 2030.

Keywords

• common agricultural policy
• Tobit model
• agri-environment-climate measures
• organic farming support