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The Causal Effect of Crop Diversification Obligations on Crop Diversity: An EU-level Analysis

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Abstract

The Common Agricultural Policy (CAP) is a cornerstone policy of the European Union, increasingly focused on promoting environmentally sustainable practices. In 2014, the CAP introduced Greening payments and a crop diversification requirement to enhance soil resilience and mitigate ecosystem degradation. Despite its economic significance, the policy's effectiveness across the EU remains largely limited. This study evaluates the impact of the Greening crop diversification requirement on crop diversity itself and on a set of subsequent outcomes, including agricultural land allocation, the economic performance of farms and indirect environmental outcomes. Using farm-level data from the Farm Accountancy Data Network (2012-2017), causal relationships are identified, through a design that combines propensity score matching and difference-in-differences, by comparing farms needing to adapt to the new requirements to those who were already compliant. Additionally, a regression discontinuity design estimates local average treatment effects for 2017, thereby exploiting the diversification requirement’s threshold-based design. Both strategies corroborate the conclusion that Greening measures have significantly increased crop diversity across the EU; moreover, results for the remaining farm-level outcomes are consistent with adaptation responses to the new environmental requirements. Overall, the results highlight the policy’s effectiveness in promoting sustainable agriculture throughout the EU.

Suggested Citation

  • Brutti, Zelda & Freo, Marzia & Serlenga, Laura, 2025. "The Causal Effect of Crop Diversification Obligations on Crop Diversity: An EU-level Analysis," JRC Working Papers in Economics and Finance 2025-03, Joint Research Centre, European Commission.
  • Handle: RePEc:jrs:wpaper:202503
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    File URL: https://publications.jrc.ec.europa.eu/repository/handle/JRC141256
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    More about this item

    Keywords

    Crop diversification; Greening payments; Common Agricultural Policy; FADN;
    All these keywords.

    JEL classification:

    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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