An area-specific approach is needed to meet climate, environmental and biodiversity targets for 2030 under common agriculture.
Raising the water table in peat meadows and extending buffer zones around Natura 2000 sites are both essential to meet the government’s agricultural carbon and nitrogen targets. Farmers could be directly compensated for the additional constraints and efforts this will entail by transferring 30% of the CAP budget from the first pillar to the second pillar. In addition, the impact on farmers’ incomes will be limited in absolute terms, but will vary by sector.
These results are based on scenarios analyzed by Wageningen University & Research with the aim of determining the most efficient way to use CAP funds to obtain maximum benefits. The research was commissioned by the Ministry of Agriculture, Nature and Food Quality. Wageningen was asked to develop and explore options for the National Strategic Plan (NSP) regarding how best to allocate the available budget of around 800 million euros per year to achieve the various objectives (economy, climate, environment, biodiversity and landscape).
The study reveals that the major issues are so specific to certain regions of the country, particularly in terms of climate and nitrogen emissions, that they require targeted CAP funding (and this also applies to non-CAP funding).
Rising groundwater level
By far the most economical way to reach the 2030 climate targets for agriculture is to raise the groundwater level in 80,000 hectares of peat meadows, as outlined in the Netherlands climate agreement. Indeed, a large part of the Dutch agricultural CO2 emissions are produced in areas of peat meadows, and raising groundwater levels is an effective way to reduce these emissions. None of the other solutions will allow the sector to achieve its goals without also spending a substantial amount of taxpayer dollars. Depending on the design of the system, farmers in peatland areas may be compensated for the effects of groundwater level rise from available CAP funds and therefore should not be disadvantaged by the measures. It will cost around 40 million euros per year.
Buffer zones
Natura 2000 sites need buffer zones where agricultural extensification can reduce nitrogen deposition. Assuming a width of 250 meters, this will affect some 160,000 hectares of land. Agricultural extensification involves reducing the number of people per hectare and reducing the environmental impact of arable farming with measures such as reducing the use of fertilizers and raising the level of groundwater. The study identified an option whereby farmers can be fully compensated by CAP funds for the loss of income this entails. This would represent around 100 million euros per year of CAP expenditure.
Regional rather than national implementation of eco-schemes
The new CAP introduces eco-schemes, a new way of subsidizing farmers who voluntarily participate in measures to improve the climate, the environment and biodiversity. The study reveals that a uniform regime at the national level will be insufficient to achieve the objectives. If Dutch farmers can choose from a national menu of activities accessible to all, the effectiveness of climate measures and nitrogen emissions will be reduced by a factor of 10, as environmental problems are concentrated in certain areas. Each area therefore requires targeted measures specific to that area. However, even if such measures are implemented, the agreement’s objectives on climate and nitrogen emissions cannot be achieved by eco-programs alone, but also require an increase in groundwater levels. in peatland regions and the creation of buffer zones around Natura 2000 sites.
The impact on farm income varies by sector
The only legal possibility to compensate farmers for compulsory measures in peatland regions and around Natura 2000 sites is to transfer the necessary budget from the first pillar (the European Agricultural Guarantee Fund, which provides income support) to the second. pillar (the European Agricultural Fund for Rural Development, which targets other themes such as innovation, young farmers and agricultural nature management).
The impact of this transfer on average agricultural income will be limited to € 4,300, € 3,000 and € 1,500 less income per year if respectively 40%, 30% or 20% of funds are transferred (this compared to the current transfer of 10%). However, the impact could be significant for specific sectors. For example, farmers in Veenkoloniën (former peat-cutting areas) and non-dairy grazing operations could lose up to 20% or more of their income.
In particular, farmers with large tracts of land risk losing the most income. This could in part be “corrected” by redistributing subsidies from farms with above-average incomes to those who need them most.
The new CAP requires a paradigm shift
The philosophy behind the current CAP is that all farmers should receive an equal amount of financial support per hectare. However, the new CAP aims to achieve specific objectives in response to the main economic, environmental and social challenges in a Member State. The Ministry of Agriculture, Nature and Food Quality is advised to transform the CAP from an instrument to support equal income per hectare for all farmers into an instrument that facilitates area-specific measures for specific problems in these areas and supports the farmers concerned with regard to the consequences of these measures.
Background
The revised CAP will enter into force on January 1, 2023. Member States are required to decide how to spend CAP funds. For the Netherlands, this represents around 800 million euros per year. Member States should set targets in their own NSPs for a range of economic, environmental and social targets as well as for knowledge development and innovation. Targets should be based on an analysis of the problem. Member States can be penalized if they do not meet their targets. Part of the income support (25%) is to be spent on eco-programs, a form of performance-based funding that will be available to all farmers.
Up to 40% of the funding from the first pillar of the CAP (traditional income support) can be transferred to the second pillar (rural development, agri-environmental-climate measures and innovation) to promote innovation, green objectives and areas to natural handicaps (eg regions and regions below sea level) and / or to compensate for restrictions based on the Birds and Habitats Directives and the Water Framework Directive. Some instruments are more efficient or profitable than others.
The report describes in detail all the CAP targets for the base year 2030, proposes scenarios for achieving them and thus offers advice on how to use CAP funds effectively. It also explores which measures are the most cost-effective and what their consequences will be on farmers’ incomes and on the achievement of the government’s climate and biodiversity objectives.