Public goods measurement concerns in the CAP post 2013

The term public goods first entered into the CAP debate in 2007 when it was used in an agricultural context by the environmental NGOs. Since then it has gradually infiltrated the mainstream policy debate appearing in many papers and speeches from research papers to the highest level of decision making. The need for securing mainly environmental public goods in the future CAP is echoed by an increasing number of stakeholders, rallying behind the slogan of “Public Money for Public Goods”, developed by Zahrnt (2009). Becoming the primary focus, the concept is now used more generally to refer to any sort of public benefit from agriculture, thereby justifying the need for public support, as expressed by various stakeholders.

Now it seems that the Commission wants to link the provision of public goods to direct payments by greening the first pillar which would represent a very important innovation in the history of the CAP. By using the wording of the Commission, this green payment will be paid for “compulsory practices to be followed by farmers addressing both climate and environment policy goals” under the form of “simple, generalised, non-contractual and annual actions that go beyond cross-compliance”. The latest proposals mention three conditions (three different crops on arable land, the maintenance of permanent grassland and a 7% of the area devoted to ecological focus) as requirements of receiving “greened” direct payments.

However, this idea has many caveats. First, as discussed in a previous post, it seems that this idea actually means a reintroduction of the set-aside programme abolished in 2008. Second, it also seems that we are now faced with a super-cross-compliance (by using the wording of Alan Matthews) as farmers opting even for the basic payment must also meet these new requirements. This raises several other questions well discussed in the debate evolving around Ulrich Koester’s previous post.

What I see as the main problem with this proposal is that it neglects the fact that we cannot measure the value of public goods properly. It is apparent that we can only make educated guesses about the value of a landscape or the value of biodiversity. As a result, any estimates will be subject to ongoing contest and dispute and it is unclear how the Commission proposes to deal with these problems. There is no meaningful common value for public goods throughout Europe. There is no reason to suppose that the same public goods policy should apply to Established and New Member States, still less for each and every region or farm. Moreover, without knowing the proper indicators and measurement methodology, the efficiency of the delivery of environmental public goods can hardly be evident. Questions arise as to who will evaluate (and on what basis) whether public money spent on the provision of public goods has led to the achievement of the policy’s aims or not. Going further, if we cannot measure the outcome, it is impossible for taxpayers to understand exactly what they are paying for.

What might be a solution is the support of already existing private programmes. This might take the form of tax-deductable private donations for non-profit organisations or public money given to validated environmental organisations based on the number of members. This would let the general public put their money where their mouths are and would also cultivate some competitive provision of public goods. Competition between such organisations for support from the general public and from the states would be much better, at least as I suggest, than compliance and set-aside based instruments.

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3 Responses to “Public goods measurement concerns in the CAP post 2013”

  1. Jack Thurston
    November 15, 2011 at 02:12 #

    A word of caution. Just because something is tricky to quantify and price in an economic terms does not mean it doesn’t have a value. The place to start with the economics of environmental public goods is the various TEEB report. Well worth a read if you’ve not had the chance. You will perhaps be surprised by the rigour of the analysis and the amount of data deployed. Difficulty in quantifying and valuing benefits of public policy objectives is nothing new. How to value the life that may or may not be saved by a costly new medical intervention? Or the value of a state-funded university? Or clean air? Or an opera house?

    I am intrigued by your suggestion a priavte sector / volunterist logic in relation to payments for environmental conservation. Presumably one could apply the same logic to direct payments for income support for farmers. In place of current direct payments in Pillar 1, the public could be invited to make tax-deductible donations to farmer welfare charities. In terms of the CAP this would indeed be a radical policy innovation and substantial budget savings could be realised.

  2. Samuel
    November 15, 2011 at 13:51 #

    If you read carefully the legal proposals on greening direct payments and Ecological Focus Areas (EFA, art. 32), it has not to be understood as a come back of the compulsory set-aside, but more as ecological or green infrastructures (hedges, ponds, ditches, buffer strips along the rivers, voluntary beekeeping set-aside, trees in line, forest…) such those already required by the current cross compliance/good agricultural and environmental conditions.

    Commissioner Ciolo? also realized the power of words to those who fear that farmland are lost to production in favor of ecology. Now he’s speaking of green infrastructure to illustrate the EFA (i.e. during the meeting with MEPs and farm minister on Nov. 7th).

    However, we probably need equivalence criteria for converting green infrastructures into hectares and percentage of the used agricultural area of the farmholding (i.e. 100 meters of trees in line = 1 hectare of EFA).

  3. Attila Jambor
    November 16, 2011 at 07:47 #

    Thanks for the useful comments. Jack I agree that ecosystems have an inherent value but I still have doubts on their quantification. I have read all the TEEB reports you mention (thanks for mentioning them) but I have not encountered with any possible soultions useful to us. You are right that this valuation issue is not new but we still do not have good solutions for public goods provision in agriculture – I think we agree that Commission proposals in this regard are not the best ones. I have not thought that my idea can be used for direct payments as well but you are right, it might be applicable. I am pretty sure that a private solution is much better here than forcing state intervention.
    Samuel thanks for the clarification but no matter how I read, it still seems that this idea is about putting 7% of your land to ecological focus meaning you can not produce crops there – this is actually what set-aside is about. It sounds great to call this green infrastructure but how shall we measure its effect?