Agri-environment policy in an era of lower government expenditure: CAP reform and conservation payments

Governments are seeking to reduce levels of expenditure. In the reform of the Common Agricultural Policy (CAP) it will be important to deliver the environmental objectives of agricultural policy more cost-effectively. This paper reviews the different agri-environmental mechanisms and their relative scale and performance. Likely reductions in the Single Farm Payment (SFP) imply a need to shift resources from payments for the reduction of intensity towards payments to prevent abandonment. More cost-effective policies may be achieved by shifting funds from the SFP into more targeted mechanisms, changing standards currently achieved by cross-compliance into regulations, and increasing targeting and competitive allocation mechanisms.