Green Light for Green Agricultural Policies? An Analysis at Regional and Global Scales

This study analyzes the effects of introducing a biodiversity-targeted program for ecological focus area on all farms with arable land in the EU by quantifying its global and regional, economic and environmental impacts in a mutually consistent way. This is challenging due to the differing spatial scales of the problem – ranging from on-farm decisions regarding setaside in the EU, to supply response around the world. In order to address this challenge, we combine the supply side of the CAPRI model, which offers high spatial, farm and policy resolution in the EU, with the GTAP model of global trade and land use. Both models are linked through a multi-product, restricted revenue function for the EU crops sector. The results predict improved environmental status in the high yielding regions of the EU. However, price increases trigger intensification in the more marginal areas of Europe where little or no additional land is taken out of production. We find that the loss of 3.7 Mio ha of arable land in the EU is partially compensated by an increase of 0.4 Mio ha in other regions of the globe, as well as increased fertilizer applications. Thus the improvement of environmental status in the EU comes at the price of global intensification, as well as the loss of forest and grass land areas outside the EU. Overall, we find that every hectare of land that is set-aside in the EU increases these emissions in the rest of the world by 20.8 tonnes CO2eq.