The CAP coherence between redistributive and environmental goals: do the allocation criteria for direct payments play a role?

Abstract

The Common Agricultural Policy (CAP) has incorporated environmental sustainability in addition to traditional goals aimed at enhancing farmers’ incomes. However, such a policy intervention is not free from drawbacks and limitations. We focus on decoupled direct payments (DDP) investigating whether and how the choice of the criteria for their allocation across farmers can impact on CAP coherence and effectiveness, that is the ability to jointly achieve redistributive and environmental goals. Based on a Spearman correlation analysis performed on the FADN dataset including farms from 28 European countries in the period 2015-2017, the present paper sheds lights on the disputed role of land as criterion of allocation of DDP. Despite a high level of heterogeneity of farms characteristics across the EU, quantitative evidence reveals the existence of alternative criteria of allocation of these public aids which can robustly improve policy coherence and therefore CAP effectiveness in matching equity and sustainability.