Impact of “greening” the common agricultural policy on sustainability of European agriculture: from perspective of the Baltic Sea countries

This paper examines the potential impact of the EU Common Agricultural Policy (CAP) decision – for the budget perspective 2014-2020 – known as ‘greening of the CAP’ which aims to improve the environmental performance of agriculture and hence, its sustainability. The reform established environmental measures that European farmers need to introduce in order to receive direct payments under the CAP. Using the wellestablished CAPRI model with its new extension by regional Computable General Equilibrium models, the economic and environmental consequences of the reform on agriculture are estimated. The calculations are carried out for the countries which signed so called Baltic Sea Action Plan (BSAP) – an ambitious programme to restore the good ecological status of the Baltic marine environment by 2021. The results are presented in form of agricultural, economic and environmental effects of the reform against a baseline scenario for 2020 in the analysed countries. They indicate that “greening” causes a decline in the area of the main crops, increase crop prices and slightly intensified production on the remaining areas. Farm income would increase, but due to the low intensity of agriculture in the Baltic countries this increase would be rather limited.