The impact of agricultural subsidies on environmental pollution in the European Union

The agricultural production in the European Union (EU) accounted for 40 % of the total land area of the EU Member States, providing farming opportunities for 10 million workers. In the EU, agriculture is also responsible for a significant share of greenhouse gas emissions. The research investigates how the evaluation of agricultural subsidies under the Common Agricultural Policy (CAP) can contribute to agricultural sustainability in the European Union. The research question addresses the implementation of climate agreements into CAP regulations and the influence of agricultural subsidies on greenhouse gas emissions. Panel data econometrics is employed to analyse the effectiveness of EU subsidies on diminishing agricultural emissions between 2004 and 2019. The results suggest that some agri-environmental measures included in the Common Agricultural Policy served to cut GHG emissions by increasing the area of organic farming. The expansion of organic farming and CAP payments on rural development contributed significantly to CO2 emissions reduction in the EU. On the other hand, CAP direct payments stimulated GHG emissions. Regarding CAP reforms, the Health Check carried out in 2009 helped reduce while Ciolos reform in 2013 stimulated GHG emission for a period analysed. The results draw attention to the need for action to curb EU agricultural emissions by reforming or restructuring the system of direct agricultural subsidies.