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The potential impact of a greener Common Agricultural Policy on developing countries

Research report

Research report

In the current context, it is vital to think about appropriate modalities to combat global warming and encourage sustainable growth over time. The recent discussion on reforming the Common Agricultural Policy (CAP) in order to protect biodiversity and preserve the rural environment requires us to consider whether coordinated agricultural policies in Europe can contribute to the provision of environmental common public goods, for example by reducing harmful emissions.

This paper examines the consequences of proposals to green the CAP for developing countries. When the new greening measures are binding and change the behaviour of EU farmers, this will reduce the production of European Union (EU) farmers in the short run, which could lead to increased commodity prices. This in turn would stimulate exports from developing country producers (by up to 3% for certain countries and commodities) but harm food-importing countries. In the medium to long term, a reduction in emissions would reduce damage resulting from climate change in developing countries.

Overall, the impacts are very uncertain, this paper estimates that, in the most optimistic hypothesis, the environmental gain in 2014 from a CAP greening emission reduction would be about 3% of what the EU currently spends on aid; if farmers continue with CAP greening environment-friendly practices until 2023 it would represent around 25% of aid.

Of course, given that the greening of the CAP is beneficial, this begs the question as to whether the greening of agriculture could be achieved without the CAP, and indeed whether the CAP is needed at all – because it is not the only or even the best instrument to achieve the goal of preserving the rural environment. Moreover, emission reduction activities could actually take place in developing countries, given that they have the world’s highest potential for emissions abatement in agriculture. In this regard, the Clean Development Mechanism (CDM) could present a means to move beyond current activities to include most land-use activities.

Nicola Cantore