Reconciling Farm Support and Environmental Protection:
Trends and Prospects

• Agri-environmental policy: evolution and trends
  • An evolutionary perspectives on Québec agri-environmental policy
  • Agri-environmental policy in the industrialized countries
  • Reflections on agri-environmental policies in Québec and abroad
• Agricultural support measures and their impact on sustainable development
  • Sustainable development and agriculture
  • Environmental impacts of agricultural supports
  • The distribution of farm support
• The challenge of integrating sustainable development considerations into agricultural policy
• Bibliography
• List of acronyms

ISBN: 2-550-46093-6

PDF file, 133 Ko

Agri-environmental policy: evolution and trends

An evolutionary perspectives on Québec agri-environmental policy

The intensification of Québec agriculture over the past several decades has been marked by the concentration of production, an increase in farm size and specialization, technological progress, and massive use of off-farm inputs, resulting in a significant increase in agricultural productivity. This “modernization” of farming has been extensively encouraged and supported by agricultural programs and policies, which have helped ensure a certain degree of stability for farm businesses in the face of risks engendered by market imperfections and weather (Debailleul, 1998). However, the intensification of agriculture has also significantly increased pressure on resources over the years, seriously affecting the environment in the process, notably through water contamination, soil degradation, and habitat and biodiversity deterioration (MENV, 2003).

To counteract the environmental impacts of agriculture, government authorities have put in place a whole series of measures aimed at controlling agricultural pollution and reducing its effect on the environment and human health. Table 1 provides an overview of the main initiatives taken by governments and industry stakeholders over the past 25 years in response to agri-environmental challenges. By taking a closer look at these measures, we can make a number of observations about key trends in the evolution of agri-environmental policy.

First, regulation has traditionally been the approach of choice for the government in matters of environmental protection. Three successive provincial agricultural regulations specific to the agricultural sector have been adopted since 1981, primarily to protect water and control animal waste management. Regulatory measures have also been used to impose restrictions on development ranging all the way to moratoriums, as well as to introduce a land management approach (municipalities with a manure surplus, carrying capacity). And additional legislative measures have been adopted with respect to farmland protection, planning, and development; pesticide management; and the inclusion of cross-compliance in the management framework for future farm support programs.

“Accompanying measures” are another type of intervention widely used in Québec agri-environmental policies and include numerous ways of increasing environmental awareness among producers and supporting them in their agri-environmental efforts. These measures include knowledge enhancement initiatives (soil degradation inventories, environmental monitoring, agri-environmental portraits); education, training, and technology transfer activities that encourage sound environmental practices (agri-environmental advisory clubs, pest management strategy), including some at the agricultural watershed level (St. Lawrence Vision 2000); and financial assistance programs for farms (PAAGF, PAIA, Prime-Vert) to help them achieve regulatory compliance, especially for liquid manure storage structures. Various R&D initiatives are also supported by a number of agri-environmental programs.

Moreover, provincial and federal agricultural strategies and policies—which are often developed in collaboration with farm industry stakeholders—have integrated orientations to foster environmental protection and promote sustainable agriculture. Recent measures have also introduced new methods into the government’s agri-environmental policy toolbox. The release of the Québec Water Policy in 2002 highlighted the importance the government is now placing on integrated watershed management to better protect this resource. More recently still, the Québec government has decided to implement a number of BAPE commission recommendations on hog production (public consultations, introduction of cross-compliance).

Table 1: Highlights of Québec agri-environmental policy (1978-2005)

Sources: Gouvernement du Québec, 2005 and 2004; MENV et al., 2004; AAC, 2003; MENV, 2003; Debailleul, 1999; Fournier and Henning, 1990.

Agri-environmental policy in the industrialized countries

Most industrialized countries have also put in place various measures to improve the environmental performance of their farming sectors. As in Québec, the most common approaches combine regulatory measures—which have grown progressively stricter over time—and the introduction of agri-environmental payments to help farms cover the cost of converting infrastructures and equipment to make them more environmentally friendly. In addition, financial support is provided for initiatives in technical assistance, education, and R&D.

A number of European countries have also set up agri-environmental programs which offer payments to encourage less intensive farming practices (i.e., extensification of crops and livestock raising, integrated production); support farming systems with better environmental performance (e.g., organic farming); promote biodiversity-related objectives (i.e., preservation of rare cultivars and breeds, species and habitat protection); and encourage ecological services (e.g., protection of sensitive environments, landscape preservation) that extend beyond the environmental benefits of “sound management practices”. In addition, the United States and many European countries have developed resource retirement programs that compensate farmers who remove land or livestock from production. Although agri-environmental payments to farmers are increasing, they still only represent an estimated 3% of total farm subsidies in the OECD countries (OECD, 2003a.)

In addition to agri-environmental payments, several other economic instruments play an important role in certain countries. Several European nations and U.S. states levy taxes on inputs (pesticides and inorganic fertilizers). Charges are also paid on nutrient surpluses in a few European countries, and a system of tradable permits has been put in place in the Netherlands.

Cross-compliance is another approach increasingly popular with government authorities. Cross-compliance measures linking agricultural support programs to respect for minimal environmental standards are currently employed in the United States and some European countries. Depending on the type and source of major agri-environmental problems, they make assistance payments conditional upon compliance with environmental standards governing crops (U.S., Netherlands, France), livestock production (Ireland, Catalonia), or both (United Kingdom, Switzerland, Denmark, Finland, Norway, Italy, Greece)¹. The European Union Common Agricultural Policy (CAP) of 2003 stipulates that such measures will be in use in all EU member states by 2005 (OECD, 2003a). The advent of this approach highlights the extent to which past agricultural support programs have been designed independently of environmental objectives. Integration of these measures is one of the first concrete indications that agricultural policy must now be designed to take both economic and environmental dimensions into account.

Finally, two other types of agri-environmental measures have emerged in recent years. First, several countries have, over the past ten years, shown an interest in developing new “eco-labeling”, notably a certification process designed to provide consumers with information on the environmental characteristics of the farming systems (environmental management system). Second, some countries have also begun promoting community-oriented approaches that draw on local know-how to resolve environmental problems, including watershed rehabilitation (OECD, 2003a).

This brief overview of agri-environmental policies shows that numerous institutional initiatives have been developed to mitigate the environmental impacts resulting from the intensification of agricultural production, particularly over the past four decades. Moreover, in response to the growing environmental pressures from farming, agri-environmental measures have come to play an increasingly central role in the agricultural policies of most industrialized countries (Debailleul and Boutin, 2004; OCDE, 2003a).

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¹ For the sake of clarity, it is important to note that according to the OECD (2003e), supplementary payments made to farmers for adopting environmentally friendly practices are not considered measures of cross-compliance, but are rather “agri-environmental payments.” The cross-compliance mechanisms in effect in the U.S. and the provisions for cross-compliance in the CAP are clear in this regard: eligibility for regular agricultural assistance is subject to meeting cross-compliance requirements.

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Reflections on agri-environmental policies in Québec and abroad

A comparison of measures used in Québec and in other regions of the globe reveals that Québec essentially relies on regulation, agri-environmental payments linked to farm investments, and other conventional support measures (extension and training, technology transfers, research, etc.). More recently, new tools have been added to complement these existing measures, including environmental certification for farms (Agriso), cross-compliance in support programs and, most recently, the watershed management approach. Since 2002, farm assistance has also been made available for certain environmental services (shelter belt plantations, riparian zone revegetation and stabilization, etc.)

Other types of measures, however, have not been retained for Québec’s agri-environmental policies. For example, agri-environmental payments have primarily been directed into investments and equipment upgrades to farms help meet regulatory requirements and have so far not been used to support lower-intensity or organic farming systems. Furthermore, there has been little effort to promote resource retirement measures in intensive production areas. And aside from agri-environmental payments, no other economic instruments have been deployed to help promote agri-environmental objectives in the province.

Like most jurisdictions of industrialized countries, Québec has stepped up environmental measures regulating agricultural activity and multiplied the number of agri-environmental initiatives, which are in turn playing an increasingly important role in agricultural policy. Given growing public awareness of environmental issues and the proliferation of information, the OECD (2003a) estimates that this trend is here to stay and will generate even stronger demand for improved environmental performance in the agricultural sector. Indeed, many of Québec’s important agri-environmental policy measures have been adopted in the wake of heightened media coverage of agriculture-related environmental problems (see Table 1). The period 1996–1997 was marked by the Québec Auditor-General’s report and the complaint to the NAFTA Environmental Cooperation Commission. The 2000–2001 period was also marked by media events (the tainted water tragedy in Walkerton, the release of Bacon, the Movie, etc.) and the publication of several reports (the water management commission report, a new Auditor General’s report, the Public Health Department report on the health risks associated with livestock production, the Brière report on the link between environmental issues and social cohabitation, etc.).

To better appreciate the measures in effect in Québec and get a sense of emerging trends in agri-environmental policy, it is worth taking a more specific look at environmental measures that target pork production in countries and states where, like in some regions of Québec, pig farming is practiced on an intensive basis. First, from a regulatory perspective, a recent comparative analysis of environmental regulations governing livestock production shows that the regulatory dynamic in Québec is relatively similar to that in other countries, even though Québec has displayed more leadership in the area of nutrient management plans (Debailleul and Boutin, 2004). As for non-regulatory measures, Table 2 compares the main agri-environmental policy instruments in effect in 2003 in certain countries and regions with areas of intensive hog production.

Closer study of this table shows that more restrictive control measures have been adopted for pig farmers in these areas (e.g., cross-compliance, taxes/charges, etc.), complemented by measures to limit production, such as livestock buyout programs aimed at reducing hog populations (Netherlands, Catalonia, Brittany) and limits on pig density per hectare (Denmark).

Another aspect of agri-environmental policy worth discussing is the level of public assistance to farmers. An examination of Québec’s agri-environmental assistance programs shows that in 2002–2003, the government incurred over $70 million (CAN) in spending through the Prime-Vert program, an amount representing some two-thirds of Canada’s total agri-environmental spending for this same period (MAPAQ, 2003; AAFC 2003). Provincial assistance programs to help livestock producers achieve regulatory compliance are another illustration of the level of Québec agri-environmental support. Subsidies available under these programs cover between 70% and 90% of the cost of building manure storage structures—a level of support equivalent or superior to those in the European Union (30% of costs in Denmark, 65% in France) and the United States (up to 75%) (OECD, 2003b). Finally, in a last example, public spending for agri-environmental interventions averaged nearly $30 (CAN) per hectare for the 1999–2001 period, on par with U.S. figures and several times greater than amounts in the other Canadian provinces (Tremblay et al, 2004). However, it should be remembered that these agri-environmental investments also reflect the fact that Québec has more high-intensity agriculture than any other provinces—and probably more serious environmental problems as a result.

Although agri-environmental requirements are an increasingly important component of agricultural policy, they are a negligible factor in farm competitiveness. In the pork industry, for example, the OECD (2003b) reports that regulatory costs imposed by environmental policies average 1% to 2% of total production costs, and are therefore relatively limited in comparison to other charges. In fact, the main factors affecting international competitiveness and farm profitability in the pork industry are capital and labor costs, exchange rate fluctuations, and the business management decisions made by farmers. These considerations have led the OECD to conclude that the “potential competitiveness impact of environmental regulations imposed on pig farming remains an adjunct to the overall debate on the relative competitiveness of pigmeat production in various countries” (2003b; pp 132-133).

In concluding this section, our analysis of the evolution of agri-environmental policies shows a clear trend toward the densification and reinforcement of government agri-environmental measures. Governments are seeking to exercise greater control over agricultural activities, which have grown increasingly intensive over the years. Although these measures may have helped limit the negative impact of increased agricultural pressure on natural resources, the OECD (2003a) believes that their effects so far have been rather limited, and that results remain to be further investigated.

Parallel to our reflection on agri-environmental policy, the challenge of integrating environmental concerns into agricultural policy also raises the question of “policy consistency” and compatibility between agricultural policy and agri-environmental measures. The same agricultural support policies that have contributed to increased productivity and production are also cited for their negative effects on the environment (OECD, 2003a). In the case of Québec, the relationship between agricultural policy and environmental problems and the role of certain support programs in fostering environmentally harmful practices have been raised on several occasions in the past (Nolet, 1998; Debailleul, 1998; Auditor General of Québec, 1996; Debailleul and Ménard, 1990; Fournier and Henning, 1990). For example, Québec’s auditor general (1996) has deplored the fact that farm income stabilization insurance plan (FISI) is entirely based on models that maximize production and includes no environmental criteria.

Situations like these have led the OCDE (2003b, p. 19) to ask “to which extent agri-environmental policies are fixing problems created amongst other reasons by agricultural support policies?” We will explore this question in greater depth in the next section by taking a closer look at OECD research into the environmental impact of the main types of farm support. We will also examine the potential role support programs can play in developing a consistent body of agricultural policy that can help meet the environmental and sustainable development challenges of agriculture in the 21st century.