Policy Designs for Integrating Green Outcomes into the CAP. Findings from Interviews with Farmers and Workshops with Administrators in Germany

Connecting area-based direct payments to environmental performance has been a long-term strategy of CAP reform to move stepwise from income support towards remuneration of public goods and services provided by farms and farmers. However, the policy instruments of the CAP, especially the “greening” payments, have shown very limited environmental effects on the ground due to unambitious requirements. To increase the environmental performance of the CAP reform, ecologists suggest to shift funds from the first to the second pillar in order to increase the budget for agro-environmental programmes, whereas other ecologists emphasise that direct payments affect almost the entirety of agricultural land in the EU and are therefore an important vehicle to increase the environmental performance of agricultural operators across the Union. Over recent years two strategies have emerged to link area-based direct payments more closely to environmental performance. The first strategy aims to link the reception of such payments to a certain level of environmental performance which is measured through a differentiated system of points: lists of environmentally friendly agricultural practices are valorised through a system of credit points which reflect the environmental benefit and the opportunity costs of each measure. The amount of payment entitlements then depends on the number of credit points earned by a farm holding. A second strategy links the payment entitlements to landscape features that valorise existing, non-productive landscape features. Rather than merely requiring that existing landscape elements are not removed, the density and quality of landscape elements would be used to differentiate the amount of premium entitlements per hectare. Both strategies require a novel policy design surrounding the system of area-based payments which currently dominate the first pillar of the CAP. The research project ZA-NExUS (Future-oriented agricultural policy – conserving nature, protecting the environment), which has been funded by the German Federal Agency for Nature Protection (BfN) – has developed a proposal for a novel architecture of the CAP. Since December 2017, a follow-up project, ZA-NExUS-02, has operationalised the policy instruments and tested their acceptability and likely effectiveness through in-depth interviews with farmers across Germany and focus groups with agricultural and environmental administrators and other experts in CAP implementation in Germany. The presentation will first characterise the different approaches to link direct payments to green outcomes from a policy design perspective. We then present the ZA-NExUS approach and its operationalization. We present key findings from the semi-structured in-depth interviews with 30 farmers, which were conducted between January and April 2019, and from five focus groups, which took place March and May 2019. Based on the findings, we discuss the design choices, assumptions and implications of CAP reform, with a particular view to drivers of path dependence and policy lock-in that prevent policies to address nexus problems.