Decentralisation of agri-environmental policy design

François Bareille,Matteo Zavalloni

doi:10.1093/erae/jbz049

François Bareille, Matteo Zavalloni

Open Access

https://doi.org/10.1093/erae/jbz049

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Abstract

Abstract We theoretically examine the gains of the decentralisation of agri-environmental policy design. We consider a model with homogeneous regions and joint production of local and global public goods from agriculture. Assuming that governments are characterised by different agency costs and knowledge of the PG values, we evaluate whether decentralisation is a suitable strategy to improve the efficiency of agri-environmental payments. We find that partial decentralisation always improves the welfare. We apply our theoretical model to the case of abandoned wetlands in Brittany. We find that national governments are the most suitable to design agri-environmental policies. Our results contribute to reflections on future Common Agricultural Policy.

Highlights

Agriculture jointly produces private agricultural goods and environmental public goods (PGs), such as biodiversity, water quality or carbon sequestration (OECD, 2015)
The environmental federalism framework has not been applied to the agricultural sector, despite some specificities of agriculture that we present in the following paragraphs
The results follow the theoretical analysis: decentralisation of the Common Agricultural Policy (CAP) increases the welfare compared to the actual centralised situation

Summary

Introduction

Agriculture jointly produces private agricultural goods and environmental public goods (PGs), such as biodiversity, water quality or carbon sequestration (OECD, 2015). Zavalloni the provision of environmental PGs through the Agri-Environment-Climate Measures (AECMs) defined in the Common Agricultural Policy (CAP) Given their structure, design, objectives and budget, the AECMs are largely decided on and bargained over at the EU level (Beckmann, Eggers and Mettepenningen, 2009). While the subsidiarity principle ensures that agri-environmental programmes are locally formulated, they are still subject to the rules of the EU since their final approval remains up to the European Commission (EC) in agreement with articles 107 and 108 of the Treaty on the Functioning of the EU Such centralised control has been criticised given the heterogeneity of benefits and costs of PG provision across the EU (Beckmann, Eggers and Mettepenningen, 2009; European Court of Auditors, 2011; Droste et al, 2018). The EC addresses this issue in its proposal for the new CAP, claiming that each member state will have the flexibility to implement specific instruments tailored to their local needs (COM(2018) 392)

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