EU agri‐environmental programs and the “restaurant table effect”

The share of agricultural area enrolled in EU agri‐environmental programs varies significantly between EU member states. These national differences are explained, based on a model that reflects both, that these programs internalize externalities and the political economy. We identify six factors that affect the extent to which agri‐environmental programs are implemented: environmental benefits, opportunity costs of participation, budgetary pressure, the share of program expenditures financed by the EU, the political weight attributed to farmers at the national, and the political influence of each country at the EU level. In addition, we demonstrate that, if the policy decision‐making process is noncooperative at the EU level, countries that contribute less to the EU budget will ceteris paribus implement more programs. Using data of four years and feasible generalized least square methods, we are able to confirm our theoretical results including a noncooperative behavior of EU member states.