The recent release by the Commission of its Mid-Term Review of the EU’s 2020 Biodiversity Strategy makes for sorry reading when it comes to Target 3 “To increase the contribution of agriculture and forestry to maintaining and enhancing biodiversity..”. Specifically, Target 3A dealing with agriculture had the following objective:
By 2020, maximise areas under agriculture across grasslands, arable land and permanent crops that are covered by biodiversity-related measures under the CAP so as to ensure the conservation of biodiversity and to bring about a measurable improvement in the conservation status of species and habitats that depend on or are affected by agriculture and in the provision of ecosystem services as compared to the EU 2010 Baseline, thus contributing to enhance sustainable management.
The Mid-Term Review concludes that there has been no significant progress towards this target. One indicator, illustrated in the figure below, is that there has been no measurable improvement in the status of the majority of agriculture-related species and habitats covered by EU nature legislation since the last reporting period. Grasslands and wetlands have the highest proportion of habitats in ‘unfavourable — bad’ or ‘deteriorating’ status.
While populations of common bird species have started stabilising since 2010, farmland birds have continued declining. Pollination services are in steep decline with multiple pressures on wild bees. Grassland butterflies are declining severely and there is no sign of levelling off. Further details on the conservation status of species and habitats can be found in the Commission’s Mid-Term Review or in Birdlife International’s mid-term report on the EU’s Biodiversity Strategy Half Way There.
However, the Mid-Term Review strikes a note of optimism in noting that the CAP reform for 2014-2020 includes various instruments that can contribute to support biodiversity. Cross-compliance represents the basic layer of environmental requirements and obligations to be met by farmers. The Rural Development Regulation provides for a range of biodiversity-favourable options from which member states and regions can choose. Based on the 73 (out of 118) RDPs adopted by the end of August 2015, the Commission estimates that 19.1% of total agricultural land is under management contracts supporting biodiversity and/or landscapes, although with very large disparities among member states and regions.
Finally, the Mid-Term Review notes that direct payments reward the delivery of environmental public goods, and that one of the three greening practices under the first pillar — ecological focus areas (EFAs) — specifically targets biodiversity. Unfortunately, it is very unlikely that EFAs, as implemented, will make any worthwhile contribution to halt or reverse the decline in biodiversity. We look at some of the reasons why in this post (see this post for an earlier critique).
EFAs – which farms are affected?
We first provide a reminder of the legislative provisions regarding EFAs which are set out in Article 46 of the Direct Payments regulation and the associated Delegated Regulation 639/2014. Where the arable land of a holding covers more than 15 hectares, the farmer shall ensure that an area corresponding to at least 5% of the arable land of the holding is ecological focus area. Holdings with less than 15 ha of arable land are exempt from the EFA requirement. Other holdings are exempted:
• If more than 75% of the eligible agricultural area is permanent grassland, used for herbaceous forage or for the production of crops under water, unless the arable area is over 30 hectares;
• If more than 75% of the arable area is used for production of grasses or herbaceous forage, for leguminous crops or is land laying fallow, unless the arable area is over 30 hectares:
• If the holding is an organic farm:
• Permanent crop area (as this is not considered arable land):
• ‘Forest exemption’ – member states with more than 50% of their total land surface area covered by forest can decide that holdings in areas of natural constraints in their countries can be exempt, provided more than 50% of the local administrative area is covered by forest and the ratio of forest to agricultural land is greater than 3:1.
EFAs – what is required?
Up to ten different high-level elements can be combined to form EFAs while, for one of them, landscape features, a further nine separate elements are defined. Member states can choose which of the elements they wish to make use of. They are required to lay down further criteria to qualify those features and areas as ecological focus areas. Specifically, in order to meet the biodiversity objective, those criteria should ensure the safeguarding and improvement of biodiversity on farms.
The ten high-level elements are:
(a) land lying fallow. Voluntary actions such as the seeding of wildflower mixtures with a view to improve the biodiversity benefits are not forbidden;
(b) terraces. Member states should define detailed conditions based on national or regional specificities, taking account of their value for biodiversity;
(c) landscape features, including features adjacent to the arable land of the holding that are not included in the eligible area for direct payments. Member states are required to clarify the link with landscape features already protected by cross-compliance;
(d) buffer strips. In the interest of biodiversity benefits, when counting buffer strips towards EFAs they may not be used for production nor chemical fertiliser nor pesticides applied, although member states can decide whether or not grazing and cutting for forage is allowed;
(e) hectares of agro-forestry that receive, or have received, support under Rural Development Programmes;
(f) strips of eligible hectares along forest edges, where member states can decide whether or not to allow production;
(g) areas with short rotation coppice with no use of mineral fertiliser and/or plant protection products. To ensure benefits for biodiversity, member states should specify the list of tree species that may be used and the rules as regards the use of inputs;
(h) afforested areas;
(i) areas with catch crops or green cover, subject to the application of weighting factors;
(j) areas with nitrogen-fixing crops. Member States should establish the list of nitrogen-fixing crops that are considered to contribute to improving biodiversity, and lay down rules that would avoid compromising the biodiversity objective.
The list of landscape features under (c) includes hedges, ponds, ditches, trees in line, in group or isolated, field margins, terraces and stone walls, nine elements in all, making a total of 18 possible elements among which member states could choose (justification is required for the choice of landscape elements). Member states could choose those landscape features defined in the Delegated Regulation 639/2014 and/or those defined under their national cross-compliance rules.
A system of conversion and weighting factors is set out in an annex to the Delegated Regulation. Conversion factors are used to convert, for example, the length of a hedge in metres or an isolated tree to square metre equivalents to calculate its contribution to the overall EFA area. Weighting factors, on the other hand, are an attempt to assess the ‘biodiversity equivalence’ of different measures. Where fallow land has a weight of 1, for example, a hedge is given a weighting of 2 and areas with catch crops or green cover a weighting of 0.3. Whether to make use of weighting is again a matter for individual member states, although where they decide to allow farmers to make use of an element with a weighting of less than 1, then the use of the weighting factors becomes mandatory.
Finally, member states were given options for regional or collective implementation by groups of farmers.
EFAs – what did member states decide?
According to DG AGRI’s analysis of the greening choices notified by member states, we observe a high degree of variation in the number of elements that farmers may use to fulfil their EFA obligation. Counting individual landscape elements, 5 member states allow between 2-4 elements, 10 member states between 5 and 9, and 14 member states 10 or more.
The most popular high-level elements are shown in the graph below. Nitrogen-fixing crops were chosen by all member states except DK, followed by fallow land (all except NL, RO), landscape features (at least one) (24 MS), short rotation coppice (20 MS), catch crops (19 MS), buffer strips (17 MS), afforested areas (14 MS), agroforestry areas (11 MS), strips along forest edges without production (9 MS), terraces (8 MS) and, finally, strips along forest edges with production (6 MS).
EFAs – what benefits for biodiversity?
The purpose of the green payment in Pillar 1 of the CAP was to encourage farmers to undertake additional efforts by adopting practices beneficial for the environment and climate action. The benefit of EFAs for biodiversity depends on (a) the additional efforts farmers undertake in order to receive the green payment, and (b) the extent to which these additional efforts contribute to conserving biodiversity. There is thus both a quantitative and a qualitative element in the evaluation. Unfortunately, under both headings, the way in which EFAs have been implemented falls short.
Some arable area is exempt
Regarding the quantitative significance of the additional effort induced by EFAs, most commentary to date has focused on the scale of the exemptions included in the legislation. However, this is not the most important element in maintaining the status quo.
The principal exemption excluding holdings with less than 15 ha of arable land from the requirement to have EFA releases somewhere between 54-59% of holdings with arable area accounting for between 13-21% of the total arable area from the obligation (the uncertainty is because the cut-off points in the Eurostat Farm Structures Survey data are 10 ha and 20 ha, respectively, rather than the 15 ha threshold for EFAs). In principle, therefore, between 79%-87% of the total arable area is expected to comply.
Of course, if the exemption for the non-arable area (e.g. permanent pasture, grassland) is also taken into account, then the number of holdings not affected by the EFA obligation rises to more than 88% of farm holdings (over 94% in new member states), and at least 48% of the EU’s Utilised Agricultural Area.
Limited extent of non-compliant arable area
However, the more important reason why the current EFA provisions will not lead to much additional benefit is that, with the broad range of EFA elements permitted, the majority of arable holdings will be able to meet their 5% obligation with their current practices. One calculation puts the area of non-compliant land likely to be affected at around 1% of the total arable area.
EFAs can consist of land under nitrogen-fixing crops, cover crops or fallow land. Eurostat collects information on the existing agricultural area under these land uses. Plotting these at the NUTS2 level and for 13 different farm type classes gives a first indication of how much non-compliant area there might be and where it is located. Data assembled by Alexander Gocht at the Thünen Institut in Germany show how these existing land uses could contribute to EFA areas across different regions (see charts).
In the first chart, the red line shows the EFA obligation – 5% EFA of the arable area for every farm. To derive the non-compliant area, first the area under organic production is deducted, and then the areas under pulses (nitrogen-fixing crops), fallow land and catch crops (appropriately weighted). This exercise suggests that around 40% of farms will have some non-compliant arable land and that this accounts for around 0.93% of the total arable area.
The second chart shows which regions will be most affected based on these assumptions. Take, for example, the contrast between Spain and Denmark. Just taking these three EFA features alone, it appears that, in general, Spanish farmers have little to do to be compliant with their EFA obligations whereas Danish farmers gain little from these options. Farmers in Denmark may be able to claim compliance using some of the other EFA options, otherwise they will be required to make greater adjustments to their farming practices than their Spanish counterparts.
These are obviously very rough estimates. First, the individual observations (farm type x NUTS2 region) are highly aggregated and average out the land use shares on individual farms within each group. At the individual level, more farms and additional land will likely be non-compliant. Also, member states can set conditions to determine the eligibility of nitrogen-fixing crops and catch crops, so not all of the existing areas with these land uses may, in fact, be eligible. For example, it can be a requirement for eligibility that no chemical fertilisers, pesticides or sewage sludge can be used on catch crop areas which may not be the case at present. Thirdly, although nitrogen-fixing crops, fallow land and catch crops were the popular EFA elements selected by member states and were selected by the great majority, some member states have not included them as options and this will also tend to under-estimate the non-compliant area.
On the other hand, this exercise does not take into account the other options which a farmer can use to fulfil his or her EFA obligation to be eligible for the greening payment, including buffer strips, landscape features and terraces. Also in these cases, many of these features will be pre-existing on farms and may already be given protection under GAEC or SMR requirements under existing cross-compliance rules. Thus, it is even possible that the charts over-estimate the area of non-compliant land rather than under-estimate it.
Limited biodiversity benefits derive from some EFA elements
Finally, with respect to the qualitative analysis, the biodiversity benefits of some of the EFA elements have been questioned. In general, conservationists put a higher value on landscape elements and fallow land (particularly if it is managed for biodiversity) than on areas that are used for production. The weighting scheme attempts to ‘normalise’ the biodiversity effects of the different elements, but the equivalence scale is disputed.
For example, the weighting factor for both area under nitrogen-fixing crops and catch crops is 0.3, giving them a ‘biodiversity value’ just 30% of fallow land and 15% of an equivalent area of hedge. Whether these weighting factors correctly capture the relative biodiversity values will depend a lot on the ancillary conditions which member states set down regarding allowable production practices. Without a specific and detailed analysis at the member state level, it is hard to draw general conclusions with regard to the appropriateness of these weighting factors.
What choices have farmers made in selecting EFA elements?
The overall impact of EFAs in practice depends not only on the options selected by the member states but also on the uptake of these options by farmers when claiming their eligibility for the green payment. Some first indications of the choices of EFA elements made by farmers in Germany are interesting in this regard.
The German Ministry for Agriculture and the Environment has just released data showing the composition of EFA elements chosen by German farmers (thanks to Sebastian Lakner’s useful series of blog posts on German EFAs for drawing my attention to this reference). Fallow land, catch crops and nitrogen-fixing crops make up 97% of the EFA area before weighting and 89% after weighting. The German data do not indicate how much of these areas already existed prior to the introduction of greening, but the Eurostat data above might indicate that the great majority of this area was already committed to these land uses. Also, there is a high probability that the areas under buffer strips and landscape elements were either already protected or required under cross-compliance rules. Thus, the claim by the German Minister in the press release that “German farmers provide additional environmental services through greening” is simply misleading. The German data do not tell us anything about the additional efforts which German farmers are making to conserve biodiversity as a result of EFAs.
Interestingly, it appears that the vast majority of covered German arable farms (i.e. arable farms not otherwise exempt) have complied with the EFA requirement. Although intended to be a mandatory requirement, non-compliance attracts a range of penalties (depending on the extent of non-compliance) and, in principle, a rational farmer could decide to opt for non-compliance and pay the penalty if it left him or her better-off (see this post for a discussion of non-compliance in the context of the crop diversification obligation). However, the penalties for non-compliance with the EFA obligation are quite severe (for example, a 100ha cereal farmer missing 1 ha of EFA equivalent would lose up to €1,250 in total). Given the available EFA options, the opportunity cost of compliance on nearly all farms is going to be much less than this, so it is not surprising to see a high rate of compliance with this greening obligation.
Distinguishing between the gross and net impact of EFAs
Even if we could gather data on the changes in land use as a result of the introduction of EFAs, we still need to be careful in drawing conclusions on the impacts for biodiversity. This is because EFAs not only change farm practices on the EFA areas, but also have indirect effects for farm practices on non-EFA areas.
Working out the full implications of greening for biodiversity is thus further complicated if we take these indirect effects into account. For example, to the extent that EFAs take land out of production, farmers will respond by intensifying inputs on the remaining land. This may adversely affect the amount of biodiversity on the remaining arable land, meaning that the overall gain in biodiversity from greening cannot be figured out just by looking at the additional gains on the EFA areas alone.
This intensification effect on the existing arable area should, however, be welcomed. If this did not happen, then more of the production foregone by EFAs would be reflected in additional area under arable crops. There is thus also an indirect land use change (ILUC) effect, analogous to the ILUC effect when calculating the greenhouse gas emission reductions from using agricultural land for biofuels. Because crop prices will increase because of reduced supply if EFAs are truly additional, this could lead to an expansion of the arable area at the expense of permanent grasslands which are also deemed important for biodiversity. If the ILUC effect occurs in a tropical country and leads to area expansion through deforestation, then the overall impact of greening EU production could be a global loss in biodiversity, given the high biodiversity value of tropical forests. Intensification on land already used for crop production is likely to have the least damaging effects on nature, as the ecomodernists argue.
The importance of taking account of these indirect effects of EFAs is quantified in a study by Pelikan, Britz and Hertel published last year in the Journal of Agricultural Economics. Basing themselves on the Commission’s original proposal for EFAs at 7% of a farm’s arable area, they quantify the indirect environmental effects in both the EU and other countries as relative prices change due to the assumed reduction in the arable area (for reasons of data availability, these authors model an extreme version of EFAs in which only fallow land is eligible). They show that there would be significant indirect effects for the environmental variables that they consider (GHG emissions and fertiliser use). They do not explicitly consider biodiversity effects, but the same mechanisms would be at work. Their study is a useful reminder of the potential importance of these indirect effects.
it will be interesting to see how DG AGRI handles these issues of additionality, differing biodiversity values of EFA elements and potential indirect effects when it comes to present its required evaluation report on the implementation of EFAs with a view to proposing an increase in the percentage arable area from 5% to 7% before 31 March 2017.
This post was written by Alan Matthews.
Photo credit: Austin Lovelock