An area-specific approach is needed to achieve the climate, environmental and biodiversity goals for 2030 under the Common Agricultural Policy (CAP)

These findings are based on scenarios analysed by Wageningen University & Research in a bid to determine the most effective way of using CAP funds to achieve the maximum benefit. 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) as regards how to best distribute the available budget of approximately €800 million per year to meet the various objectives (economy, climate, environment, biodiversity and landscape).

The study reveals that the major challenges are so specific to certain parts of the country, particularly in relation to the climate and nitrogen emissions, that they require targeted CAP funding (and this also applies to funding outside the CAP).

Raising groundwater levels

By far the most economical way to achieve the 2030 climate targets for agriculture is to raise the groundwater level in 80,000 hectares of peat grasslands, as set out in the Netherlands’ climate agreement. This is because a large part of Dutch agricultural CO₂ emissions are produced in peat grassland regions, 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 taxpayers’ money. Depending on how the system is designed, the farmers in the peat grassland regions can be compensated for the effects of raising the groundwater levels from the available CAP funds and so do not have to be disadvantaged by the measures. This will cost an estimated €40 million a year.

Buffer zones

The Natura 2000 sites are in need of buffer zones where agricultural extensification can reduce nitrogen deposition. Assuming a width of 250 meter, this will affect some 160,000 hectares of land. Agricultural extensification entails decreasing stock numbers per hectare and reducing the environmental impact of arable farming with measures such as decreasing fertiliser use and raising the groundwater level. The study has identified an option whereby farmers can be fully compensated from CAP funds for the loss of income that this entails. This would involve around €100 million a year of CAP expenditure.

Regional rather than national implementation of the eco-schemes

The new CAP introduces the eco-schemes, a new means of subsidising farmers who voluntarily participate in measures to improve the climate, environment and biodiversity. The study reveals that a nationally uniform scheme will be insufficient to achieve the goals. If farmers in the Netherlands can choose from a national menu of activities available to all of them, the effectiveness of the measures for the climate and nitrogen emissions will be reduced by a factor of 10, because the 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 targets in the climate agreement and for nitrogen emissions cannot be achieved by the eco-schemes alone but also requires increasing groundwater levels in peat grassland regions and creating buffer zones around Natura 2000 sites.

Impact on farm income varies by sector

The only legal possibility to compensate farmers for mandatory measures in the peat grassland regions and around Natura 2000 sites involves transferring the required 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 farm income will be limited to €4300, €3000 and €1500 less income per year if respectively 40%, 30%, or 20% of funds are transferred (this in comparison to the current 10% transfer). However, the impact could be significant for specific sectors. For example, arable farmers in the Veenkoloniën (former peat cutting regions) and grazing livestock farms other than dairy could lose up to 20% or more of their income.

Particularly those farmers with large areas of land stand to lose the most income. This could in part be ‘corrected’ by redistributing subsidies from farms with above-average incomes to those in greater need of support.

New CAP requires a paradigm change

The philosophy behind the current CAP is that all farmers should receive an equal amount of financial support per hectare. However, the new CAP is geared towards achieving specific goals in response to the predominant 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 for equal income support per hectare for all farmers into an instrument that facilitates area-specific measures for specific problems in those areas and supports the affected farmers as regards the consequences of these measures.