Did crop diversity criterion from CAP green payments affect both economic and environmental farm performances? Quasi-experimental evidence from France

Abstract

This study aims to shed light on the impact of the crop diversity criterion of green payments on farms' economic and environmental performances, alongside land use practices. In order to provide causal evidence, we exploit the natural experiment from the 2013 Common Agricultural Policy reform, which established stronger crop diversity eligibility criteria for farmers with over 10 ha (and 30 ha) of arable land. More precisely, we use a difference-in-discontinuity design on a sample of French farms and compare those respectively above and below the two thresholds. Our findings suggest that farms around 10 ha experienced significant land reallocation and an increase in crop diversity, while farms around 30 ha increase their number of crops. Interestingly, we also found that the main effects were primarily driven by farms that already met the diversification requirements. This suggests that the crop diversity criterion did not result in much additional change.