1COMMISSION OF THE EUROPEAN COMMUNITIES
Brussels, 27.01.1999
COM (1999) 22 final
COMMUNICATION FROM THE COMMISSION
TO THE COUNCIL; THE EUROPEAN PARLIAMENT;
THE ECONOMIC AND SOCIAL COMMITTEE
AND THE COMMITTEE OF THE REGIONS
Directions towards sustainable agriculture

2Table of Contents
SUMMARY 3
1. INTRODUCTION 5
2. FARMING AND THE ENVIRONMENT 8
2.1. General trends in European agriculture 8
2.1.1. Intensification and specialisation 8
2.1.2.Marginalisation 9
2.1.3.Developments in organic farming 9
2.2. Water 10
2.3. Land use and soil 12
2.4. Air and climate change and ozone depletion 13
2.5. Biodiversity 15
2.6. Landscape 17
3. POLICY REFORMS 18
3.1. Developments in the overall policy context 18
3.2. Environmental elements of the CAP reform under Agenda 2000 20
3.2.1. General Orientations 20
3.2.2.The horizontal regulation 21
3.2.3.Common market organisations 22
3.2.4.Rural development measures 23
3.2.5.Agri-environment measures 24
3.2.6.Compensatory allowances in less-favoured areas 26
3.2.7.Sustainable management and development of forests 27
4. DEVELOPING AGRI-ENVIRONMENTAL INDICATORS 28
5. CONCLUSIONS 30

3Summary
(1) Environmental considerations have become a major concern of the common
agricultural policy (CAP). Agriculture and forestry rely on the availability of
natural resources and, in exploiting these resources, can place environmental
pressure on them. Differentiated landscapes and related biodiversity, shaped by
agriculture over centuries, can be harmed by the abandonment of land use. The
environmental significance of agriculture and the overall approach towards the
integration of the environment into the CAP are outlined in this document.
(2) The need to integrate environmental concerns was given effect in the Single
European Act of 1986. At the Rio Summit, the signatory States adopted key
declarations and conventions with relevance to agriculture and forestry. The 5th
Environmental action programme and its revision in 1995 reinforced the need for
integration of environmental issues into the CAP. The Amsterdam Treaty makes
sustainable development an objective of the EU, while retaining the existing
Treaty bases for environmental and agricultural policy.
(3) The European Council at Cardiff in June 1998 notes the Commission’s efforts to
integrate environmental concerns into all Community policies and the need to
evaluate this in individual decisions. The European Council at Vienna in
December 1998 underlined the need to ensure that environmental integration is
adequately treated in the decisions to be made on agricultural policies within the
context of Agenda 2000.
(4) Considerations to integrate environmental elements into the CAP need to take
note of the general environmental policy measures to prevent pollution, to
minimise environmentally harmful farming activities, and to preserve natural
heritage. EU legislation of major significance for agriculture include the Habitats
and Wild Birds Directives, the legislation on water protection, and the Nitrates
Directive.
(5) The new CAP reform as presented under Agenda 2000 is designed to achieve
necessary structural adjustments in principal market regimes and a strong rural
development policy, becoming a second pillar of the CAP. Environmental
considerations aiming to assure farming practices, necessary to safeguard the
environment and preserve the countryside, form an important element of the
Commission’s proposals. The general orientation is that farmers should observe a
minimum level of environmental practice as part-and-parcel of the support
regimes, but that any additional environmental service, beyond the basic level of
good agricultural practice and respecting environmental law, should be paid for
by society through the agri-environment programmes.
(6) In the context of the common market organisations, the proposals include the
option to link direct payments to the respect of environmental requirements. The
agri-environment measures would be reinforced and form a compulsory part of
rural policy programmes. The agri-environmental measures cover ways of using
agricultural land, which are compatible with the protection and improvement of
the environment, the landscape and its features, natural resources, the soil and
genetic resources. The main objectives of measures in less favoured areas remain
broadly unchanged, namely to assure continued farming and the maintenance of a

4viable rural community, to preserve the landscape and to promote the
continuation of sustainable farming. A specific provision foresees that payments
may cover the costs of complying with obligations under environmental
legislation. Support for forestry shall promote sustainable management and
development of forests. Forests play an essential role in the preservation of the
natural environment, notably water, soil, and air.
(7) In addition, it has to be considered that promoting renewable energies from
biomass or biofuels contributes to combating climate change.
(8) The Commission’s proposals provide Member States and regions with the
instruments necessary to assure that minimum environmental standards are
observed and to promote the conservation and improvement of Europe’s unique
environmental heritage.
(9) This document complements and explains the environmental context for the
Agenda 2000 proposals and underlines the need for the continuous process of
integration and monitoring of progress.

5Directions towards sustainable agriculture
1. INTRODUCTION
Over three-quarters of the territory of the EU is agricultural or wooded land1.
While there is a great diversity in environmental values and land uses from
Mediterranean to sub-Arctic regions, a significant level of interdependence
between agriculture and conservation of the environment is evident throughout
the EU.
As commercial activities, agriculture and forestry are aimed principally at
production, which both relies on the availability of natural resources and, in
exploiting these resources, places environmental pressure on them.
Technological developments, and commercial considerations to maximise
returns and minimise costs, have given rise to a marked intensification of
agriculture in the last 40 years. The role of the common agricultural policy
(CAP) in contributing to intensification has also to be mentioned.
A high level of price support favoured intensive agriculture and an increasing
use of fertilisers and pesticides. This resulted in pollution of water and soils and
damage done to certain eco-systems; resulting high treatment costs had to be
born by consumers or taxpayers.
Among the environmental developments, which the CAP helped to speed up,
changes of landscapes due to the intensification of agriculture have mentioned.
The destruction of hedge rows, stonewalls, and ditches and the draining of wet
lands have contributed to the loss of valuable habitats for many birds, plants and
other species. Intensification in certain areas led to an excessive use of water
resources and to increased soil erosion.
During the last 15 years awareness has grown that the differentiated landscape
and related biodiversity shaped by agriculture over several centuries which has
given rise to a unique semi-natural environment with a rich variety of species
dependent on the continuation of farming can be harmed by the intensification
of agriculture. Intensification can raise problems not just in relation to landscape
and biodiversity but also for soil, water and air.
The abandonment of land use for agricultural purposes which is taking place
mainly for economic reasons also creates pressure on landscape and
biodiversity. In Europe the abandonment of farming activities can damage
biodiversity and in any case would not normally lead to the recreation of the
aboriginal natural status. The challenges proposed by both the intensification
1 44% agricultural land; 33% wooded land.

6and abandonment of farming therefore raise questions concerning the
relationship between agriculture and the environment and the future basis for the
European model of sustainable agriculture.
The desired relationship between agriculture and environment can be captured
by the term „sustainable agriculture“. Sustainability is the key concept of the 5th
Environmental Action Programme, which refers to sustainable development as
„development which meets the needs of the present without compromising the
ability of future generations to meet their own needs“. This entails preserving
the overall balance and value of the natural capital stock and a redefinition of
short, medium and long-term considerations to reflect real socio-economic costs
and benefits of consumption and conservation.
“Sustainable agriculture“ would call for a management of natural resources in a
way which ensures that the benefits are also available in the future. This
definition of sustainability reflects the self-interest of farmers. A broader
understanding of sustainability extends, however, to a broader set of features
linked to land and land use such as the protection of landscapes, habitats, and
bio-diversity, and to overall objectives such as the quality of drinking water and
air. Therefore, in a more comprehensive perspective, the beneficial use of land
and natural resources for agricultural production has also to be balanced with
society’s values relating to the protection of the environment and cultural
heritage.
Increasing public awareness of the need to integrate environmental concerns
into the European Community policies was given effect in the Single European
Act of 1986. This required environmental protection requirements to be
integrated into other policies. In 1987 the Commission produced a paper on
‘Agriculture and the environment’ taking up this theme.
Debate on environmental integration has not been confined to Europe as in
1992, at the Rio Summit, the signatory States adopted a series of key
declarations and conventions, with relevance to agriculture and forestry. In
particular, the concept of sustainable development was agreed and legally
binding conventions on climate change, biological diversity and desertification
adopted.
The 1992 reform of the CAP included specific instruments to encourage less
intensive production, both to reduce market surpluses and to alleviate
environmental pressure. This reform was accompanied by the agri-environment
and afforestation programmes, which had a specific environmental focus. Agri-
environment measures have become the focus of the Community’s
environmental approach to agriculture within the CAP since 1992.
The 5th Environmental action programme2, which lays down inter alia
objectives regarding the conservation of water, soil and genetic resources,
2 5th Environmental action programme: Towards sustainability, COM(92) 23, 27.3.1992.

7targeted agriculture as one of the five priority sectors. The revision3 of the action
programme reinforced the need for integration of environmental issues and
underlined the need for improving the integration of the environment into
common market regimes, including an inventory of environmental effects,
development of environmental criteria and best practices and the evaluation of
key policies.
The Amsterdam Treaty makes sustainable development an objective of the EU,
while retaining the existing Treaty bases for environmental and agricultural
policy. Agriculture remains a Community policy where all the instruments of
the CAP are decided by the Council of Ministers. This enables environmental
considerations to be developed, enacted and applied throughout the EU
efficiently and with direct effect.
The new reform of the common agricultural policy (CAP), proposed as a part of
Agenda 20004, is designed to achieve necessary structural adjustments in some
of the principal market regimes and the establishment of a strong rural
development policy. Environmental considerations, a central element of the
Amsterdam Treaty, form an important element of the Commission’s proposals,
both to integrate environmental concerns into the rules of the Common
Agricultural Policy and to assure farming practices necessary to safeguard the
environment and preserve the countryside.
In addition to adjustments of market regimes to the conditions facing farming in
the new century, the reform would develop a coherent integrated rural
development policy as a second pillar of the CAP, largely financed from the
guarantee section of the EAGGF5. As foreseen in the proposal, the essence of
the environmental elements of the proposals is that farmers should observe a
minimum level of environmental practice as part-and-parcel of the support
regimes, but that any additional environmental service, beyond the basic level,
should be paid for by society through the agri-environment programmes.
The agri-environmental aspect figures in the White-Book on Renewable
Energies (Com (97)599) in as far as developments foreseen for biomass should
contribute to diminish CO2 emissions significantly.
Section 2 of this paper summarises the development of policy concerning the
interaction of farming on the environment, Section 3 covers the process of
policy review and evaluation, and Section 4 sets out the strategy employed in
the AGENDA 2000 reform proposals to achieve a better integration of
environmental protection requirements into the definition and implementation of
the CAP.
3 COM(95) 624.
4 Agenda 2000: For a stronger and wider Union. COM(97) 2000 Final.
5 EAGGF: European agricultural guidance and guarantee fund.

82. FARMING AND THE ENVIRONMENT
2.1. General trends in European agriculture
2.1.1. Intensification and specialisation
The relationship between agriculture and the environment is not static.
Agriculture has intensified and intensification has in turn increased pressure on
the environment.
The European livestock sector provides a clear picture of the trend towards
intensification. Producer quotas were introduced in the milk sector in 1984 in
order to avoid over-production and stabilise markets. In the ten-year period
since then, milk production has been largely stable but dairy cow numbers have
decreased by 20% as milk yields have risen. However, the number of producers
has decreased by 50% while the average size of the dairy herd has risen from 19
to 30 cows. Indeed this figure masks the trend to very large herds as currently
more than 40% of the EU’s cows are held on farms with more than 50 cows
which resulted in higher stocking densities per hectare in regions where
concentration takes place.
In the EU pig sector, support is limited but production has been rising for many
years. The trend is for further significant increases in both production and
consumption. Pig numbers are rising. Pig production is concentrated in certain
parts of the EU. Since the 1992 reform some shifts can be observed where pig
production developed near the grain producing areas. Currently, there is a very
high concentration of pigs in Belgium, the Netherlands and Denmark and in
parts of Germany, France, Spain, Italy, Portugal and the United Kingdom.
In most Member States of the EU the vast majority of breeding pigs are held on
holdings with more than 100 sows. The average number of sows on these
holdings reaches more than 300 in the UK and Ireland and more than 200 in
Denmark, Greece, Portugal Germany Netherlands and Sweden in 1995.
In the arable sector growth in yields has of course been accompanied by an
increase in inputs: fertiliser consumption has increased from approx. 5 mio
tonnes in 1950 (nutrients), peaking at over 20 mio tonnes in the 1970s and 1980s
and decreasing to currently around 16 mio tonnes6. Pesticide use shows a similar
development with a level in 1996 of approx. 300.000 tonnes p.a. However
pesticide use has increased in Portugal, Ireland and Greece, countries with a
traditionally low use.
The decline in recent years in the use of chemical fertilisers and pesticides is
attributable to 1992 CAP reform but also to other factors, and this is an
environmentally positive development; but it does not change the fact that
overall usage today is several times higher than decades ago. In addition, most
6 EFMA: Forecast of food, farming and fertilizer use to 2008. EFMA 1998.

9recent figures show a reversal of the downward trend for both pesticides and
fertilisers7.
It should be borne in mind as well that the recent decline in pesticide use may be
partly attributable to the fact that more specific or concentrated active
substances have been developed. This means that, although further work needs
to be done on the eco-toxicity of individual pesticide active ingredients, it is
already clear that such a reduction in volume of use is not necessarily
accompanied by a reduction in the biological effectiveness and hence the
pollutant effect of pesticides.
The increase in inputs and yields has been accompanied by greater
specialisation, with a huge reduction in mixed farming and in particular a loss of
traditional rotations (including organic rotations). This mixed farming and
traditional rotations brought environmental benefits greater than those of the
systems that have replaced them.
Intensification, greater specialisation and unit enlargement are all long-term
economic and social trends within agriculture. However, such trends produce
environmental effects, which need to be controlled so as to ensure the
sustainability of agriculture.
2.1.2. Marginalisation
At the same time, a process of agricultural marginalisation is occurring in some
areas, from field to regional scale. Difficult areas within a farm may be
abandoned whilst intensification proceeds on the rest of the holding, or whole
farms may be under threat possibly to abandonment. Regions which are
potentially most vulnerable to marginalisation and possibly of abandonment fall
into two main categories – regions where extensive systems predominate and
those where small scale agriculture is characteristic.
2.1.3. Developments in organic farming
Public concern about the environment has led to increased demands for
environmentally beneficial agricultural production methods, such as integrated
production, traditional low-input farming and organic farming.
In particular, public attention has focused on organic farming as it provides a
combination of environmental, social and economic effects: Its main
environmental benefits, particularly compared with intensive conventional
farming, accrue to the sustainable rotation of land use and to the absence of
synthetic pesticides, leading, to positive environmental impacts. e.g. on
biodiversity. Non-environmental benefits include job creation due to a higher
labour demand and substantial price premiums. Particularly in areas with a high
proportion of permanent grassland or environmentally sensitive regions organic
farming can be an interesting alternative. However, also with organic farming,
7 Eurostat: pesticide in the EU: Sales, use, legislation (draft, 1998), ECPA, EFMA.

10
respect of certain environmental requirements will have to be ensured by
specific rules in order to avoid leaching of nitrates or conversion of high nature
value grassland into arable land.
The European Community’s legislation corresponds with difficulties faced by
the organic sector, the need to assure the single market and public interest in
organic farming: A legal framework for organic production methods has been
established, requiring strict controls (Regulation (EEC) No 2092/91). In
addition, organic production methods have been the subject of agri-
environmental measures under Regulation (EEC) No 2078/92 as a function of
their environmental benefits and lower profitability, especially in conversions
years. However, less attention has been paid to problems of processing and
marketing, which are identified in many Member States as significant
impediments to growth of the sector.
Remaining difficulties notwithstanding, Community measures have been able to
contribute to the significant increase of organic farming. The number of organic
farms (certified and in conversion) increased from 35.476 in 1993 to 93.830 in
1997. In the same period the area under organic production methods more than
doubled from 889.919 ha to 2.209.866 ha. A result of this was that in 1997,
organic farming accounted for some 1.6% of the total UAA and 1% of the
number of agricultural holdings in EU-15.
In addition to measures to encourage extensification, the Commission has also
proposed rules covering production standards, inspection and labelling for
organic livestock production8 and is considering the introduction of an organic
logo. This complements legislation already enacted covering crop products and
establishes the principle that Genetically Modified Organisms (GMO) should
not to be used in organic farming.9
The measures, which are currently finalised in the Council, would encourage a
type of agriculture which would have a beneficial impact on the environment
and encourage consumer confidence. The European Union has also been active
in ensuring that these consumer concerns receive sufficient consideration in
international fora.
2.2. Water
In many parts of the EU, serious environmental concerns have been expressed at
the level of abstraction of water by agriculture for irrigation, particularly in
Mediterranean countries. Where usage exceeds the rate of replenishment and the
water table falls the environmental consequences can be serious: these can
involve, e. g. salinisation by sea water invading the underground supplies, and
loss of biodiversity resulting from changes in flow of watercourses. Irrigation
8 Proposal for a Council Regulation (EC) supplementing Regulation (EEC) No. 2092/91 on organic
production of agricultural products and indications referring thereto on agricultural products and
foodstuffs to include livestock production. COM(96)366 and COM(97) 0747 final.
9 Regulation (EEC) No 2092/91 as amended by Regulation (EC) No 2083/92 and by Regulation
(EC) No 1935/95

11
can result in water pollution because of an increased concentration of pesticides
and nutrients in run-off water. In addition, even greater resources are needed to
abstract the water from deeper wells.
Concerning water quality, agriculture is a major source of nitrates and
phosphates in water. This can lead to eutrophication, with consequent
deleterious effects on the natural environment, and levels of nitrate in drinking
water supplies, surface and ground waters, which exceed EU standards10.
Comprehensive measures to remedy this problem are required under the terms
of the Nitrates Directive. The adoption of this Directive represents an important
step towards integration of environment into agriculture with the Directive
adhering to both the "polluter pays" and the "prevention at source" principles.
The implementation record of this Directive, however, is poor. 11 12 of 15
Member States are subject of legal proceedings with respect to both the non-
transposition and/or the incorrect application of the Directive.
Compliance with the Nitrates Directive would contribute significantly to solving
certain structural problems such as the excessive concentration of pig and
poultry production in some regions of the Union. The application of the
directive must be kept under constant evaluation in order to stimulate
enforcement.
The lack of implementation of the Nitrate Directive is worrying as the 1995
Dobris assessment indicated on the basis of model calculations that 87% of the
agricultural area in Europe has nitrate concentrations in the groundwater that are
above the guide-level value of 25 mg/l, and 22% that are above the maximum
admissible concentration of 50 mg/l. In many areas, these levels are increasing,
particularly so in areas of high livestock density, with existing sources of
drinking water having to be closed or being subject to expensive treatment.
Elevated levels of nitrates are also significant contributors for eutrophication,
particularly in marine and coastal areas. Large areas of the North Sea coast line
and parts of the Mediterranean have been identified as suffering from
eutrophication much of it due to pollution from agricultural sources, leading to
algal growth and other forms of changes to the ecosystems. This may lead to
economic losses for both the fisheries and tourism industry.
Some agri-environment programmes exist to further reduce nitrate leaching into
the aquatic environment and to reduce abstraction. However, compulsory
measures, for example, flowing from application of the Nitrates Directive are
not the subject of agri-environment payments. This can be regarded as a direct
consequence of the polluter pays principle which requires that minimum
environmental standards as, for example, foreseen in Community legislation like
10 Directive 80/778/EEC concerning the quality of water intended for human consumption, OJ
L 229, 30.8.1980.
11 Report of the Commission to the Council and European Parliament: The implementation of
Council Directive 91/676/EEC concerning the protection of waters against pollution caused by
nitrates from agricultural sources. European Commission, 1998.

12
the Nitrates Directive are respected by farmers without receiving additional
remuneration.
A further source of environmental pollution is the use of pesticides in a manner,
which allows residues to enter water supplies, surface and ground waters. EU
rules exist to control maximum levels of pesticides in farm produce12. Measures
to limit pesticide residues in water, for instance by applying sophisticated
integrated pest management or organic farming, exist under agri-environment
programmes, which may contribute to improve the situation. Nevertheless,
further measures will be needed to better control the use of pesticides in order to
decrease water contamination.
Land drainage and irrigation may lead to the destruction of habitats, which were
part of the wet or dry conditions existing prior to the water management
initiatives. In addition, efficient land drains and protection of flood meadows
can lead to flooding by increasing the rapidity of peak run-off into river systems.
Appropriate farming systems, including the continued use of flood plains,
diminish this risk.
EU water legislation is being brought under the umbrella of a new instrument
called the Water Framework Directive, which will simplify and refocus the
present legislation. However, this will not change the role of the nitrates and
pesticides legislation described above.
2.3. Land use and soil
Agricultural land is under severe threat in many parts of the EU from alternative
land uses and inadequate land use practices. In particular, sites for housing and
industry as well as the expanding transport network remove, sometimes entirely,
the environmental value of land. Agriculture, in contrast, in many cases
preserves land, although negative pressure may be exerted on the soil quality.
The damaging effects fall into 3 categories:
• physical degradation, such as erosion, desertification, waterlogging and
compaction;
• chemical degradation, such as changes in acidity, salinisation,
contamination by pesticides, heavy metals, etc. ;
• biological degradation, including changes to micro-organisms and to the
humus content of soil.
The main agricultural driving forces for soil erosion are unsustainable
agricultural practices on sloping lands, such as lack of effective erosion control
measures in production systems such as certain types of intensive fruit
production and olive trees, soil compaction through the use of heavy machinery,
cropping systems that leave soil bare during the rainy season, improper
12 Pesticide residue directives: for summary, see “Agriculture and Environment”, section 4.4.1.

13
irrigation systems, burning of crop residues, removal of river bank trees and
scrub and non-soil protecting monoculture.
At the same time, certain farming systems, such as managed grazing, the
presence of hedges and trees, and traditional rotation patterns, may be essential
to maintain soil quality. Several agri-environment programmes have the
conservation of soil resources as an aim. These concern programmes for
assuring certain crop rotations and in particular the promotion of organic
farming. Programmes also exist to guard against erosion and fire risk,
particularly in relation to abandoned land. Afforestation programmes under
Regulation (EEC) No 2080/92 can also make an important contribution to
reduce soil erosion.
Despite positive results achieved in areas covered by agri-environmental or
afforestation measures, soil erosion is increasing. About 115 mio hectares in
Europe are suffering from water erosion and 42 mio hectares from wind erosion.
Particular problems exist in the Mediterranean region13.
2.4. Air and climate change and ozone depletion
Agriculture, particularly as a result of an increasing number of animals over the
last 40 years, is the major source for ammoniac emissions, which lead to soil
and water acidification and contribute to damage to forests through acidity in
rainfall. In addition, together with the natural environment, agriculture is a
major source of emissions of methane from animal production and nitrous oxide
from fertiliser, which contribute to the greenhouse effect. Methyl bromide, an
ozone depleting substance, has been widely used in horticulture and the
Commission is now seeking to speed up the curtailment of its use. Moreover,
pesticide ingredients can be carried in the air and deposited elsewhere through
wind or rainfall.
In general, farming practices, which intensify the use of inputs, will increase the
emissions. However, in the case of methane14, an extensive system of animal
rearing, which entails the use of less-efficient fodder over a longer period than
intensive production, results in substantially higher levels of methane output per
unit of livestock product. Some methane mitigation options related to livestock
production therefore suggest to increase the intensity of animal production.
However, considerations on measured water pollution and decreased
biodiversity potential of such an option raise questions as to its overall
beneficial effect.
Concerning EU policy in this area, several investment schemes are aimed at
establishing treatment units to reduce emissions or recover waste gasses.
However, while the agricultural contribution to air pollution is understood, no
particular agri-environment strategy has been established to counter the effect.
13 Europe´s Environment. The second assessment. 1998 ("Dobris+3").
14 Options to Reduce Methane Emissions (Draft Final report for DG XI), AEA Technology
Environment, June 1998, p. 10 ff.

14
In relation to intensive or extensive farming, the balance of environmental
benefit has been determined to lie with extensive farming, despite the greater
methane emissions, which result.
Methane emissions as a whole are expected to decrease significantly by 2010
due to ongoing initiatives, mainly at a member state level. In the context of
Agenda 2000, there are a number of concrete EC common measures, as well as
other measures that provide a wider scope for action at the national and regional
level, that would contribute to reducing emissions.15
Furthermore, non-food agricultural production such as oilseeds and biogas could
provide a significant contribution to reductions in CO2 and other polluting
emissions through the development of renewable energy sources.
As regards specifically the contributions of bio-mass and bio-fuels to reducing
emissions, reduced CO2 emissions should result according to the estimates of
the White Book on Renewable Energies from an annual increase of 90 mio
tonnes of oil equivalent (toe) produced from bio mass: 30 mio from wood and
agricultural residues, 45 mio from energy plants (18 toe from liquid bio-fuels
and 27 toe solid bio-fuels), and 15 toe from bio-gas. It should be underlined that
the production of bio-gas contributes also to the reduction of methane emissions
and therefore achieves a double-dividend in combating climate change.
In developing the non-food sector it would be necessary to ensure that the
overall environmental impact was positive. As it is indicated in the proposed
regulation on supporting rural development, for afforestation with fast growing
species in short-term rotations three types of aid are foreseen (planting costs,
annual premium to cover maintenance costs up to 5 years, annual premium to
cover income losses up to 20 years), provided that the local environmental
conditions are respected.
As regards bio-fuels, the energy and environmental balance is, in general,
positive and the Commission encourages their development simultaneously in
the energy and agricultural context, and in measures to combating climate
change. The proposed Directive concerning taxation of energy products
(COM(97)30 of 13/3/97) foresees the possibility their exemption. The
legislation already in effect provides for the possibility for tax exemptions for
bio-fuels in the context of pilot projects (Dir 92/81 of 19/10/92). In expecting
the adoption of the new proposal, the Commission suggested in the above-
mentioned White Book on Renewable Energies that up to a market share of 2 %
one could consider to be still in a pilot phase.
Recent analysis suggests that developing the non-food sector would need to be
combined with appropriate fiscal measures.16
15 Climate Change – Towards and EU Post Kyoto Strategy COM (98) 353
16 Working Document on Non-Food Crops in the context of Agenda 2000. SEC(1998) 2169

15
2.5. Biodiversity
The rural environment is foremostly a living environment. The complex ecology
of flora, and fauna have adapted to and been influenced by farming activities. In
Europe this symbiotic relationship has evolved over, not only centuries, but
thousands of years. The result is that many species are dependent for their life-
cycle on the continuation of farming practices. Thus, for example, once common
birds such as the Chough (Pyrrhocorax pyrrhocorax), now confined to a few
breeding areas in Europe, rely on traditional grazed pastures. Another example
is the globally threatened steppic bird, the Great Bustard (Otis tarda), which
thrives in extensive mosaics of cereals fallow and pasture in Spain and Portugal.
EU environment policy ensures that especially valuable habitats are identified
and designated under the Habitats and Wild Birds17 Directives. These require
Member States to assure the necessary conservation measures, which often
require the continuation of farming. The ensuing network of sites is known as
NATURA 2000.
Farm-dependent biodiversity is not confined to the NATURA 2000 sites. Over
70% of threatened vascular plant species in Sweden depend on the open farmed
landscapes. Throughout Europe, the centuries-old practice of haymaking has
produced diverse field flora adapted to a rapid growing season and seeding
before mowing takes place. Both, the decline of and earlier haymaking have
inevitably led to a corresponding decline in the populations of field herbs.
The threats to farm-dependent biodiversity fall essentially into two categories:
intensification and under-use. While the links between intensification and
biodiversity are the subject of much continuing research18, the main agents of
change include:
• increased fertilisation (organic or inorganic);
• land improvement; land drainage and irrigation;
• increased specialisation such as monoculture and the decline of mixed
farming. This process may be promoted through reallotment
[remembrement] schemes and rationalisation of field patterns;
• loss of field margins and non-farmed habitat areas such as wet areas, farm
woodlands, hedgerows;
• indiscriminate use of pesticides;
• replacement of traditional practices, such as haymaking replaced by silage
production and temporary fallow by continuous cereals;
17 Directive 79/409/EEC of 2.4.1979 on the protection of wild birds and their habitats, OJ L 103,
2.5.1979, p. 1.
18 e.g. FAIR projects: pesticides and biodiversity; farm margins.

16
• increased mechanisation leading to soil compaction
The combination of some of the above practices is believed, for example, to
have contributed to the decline in numbers of farmland birds19. However, it
should be noted that there are cases where farm land was taken out of
agriculture for nature conservation without subsequently achieving the
protection objectives. As a consequence, well-adjusted farm practices had to be
reintroduced in order to create suitable conditions for birds. Agri-environment
measures are developing techniques for the maintenance and improvement of
bird population.
In most Member States, agri-environment measures have been implemented
under Regulation (EEC) No 2078/92 to preserve biodiversity, for example, by
reducing or ceasing the use of fertiliser and pesticides on the maintenance of
rotational practices. Examples include the introduction of organic farming,
integrated crop management, set aside of field margins and specific measures,
tested through LIFE nature projects, aimed at particular habitats. Measures are
also in place to manage farm woodlands, wetlands and hedgerows to benefit
flora and fauna.
Concerning under-use of agricultural land, abandonment can have disastrous
consequences for the natural environment. In mountain regions, other less-
favoured areas such as drylands and northern zones, the cessation of agriculture
quickly leads to the growth of scrub and then forest with a loss of the higher
levels of biodiversity associated with the farmed environment. However, the
continued existence of farming may not be sufficient to conserve biodiversity in
the absence of appropriate practices. Thus, where managed grazing has been
replaced by uncontrolled large-scale ranching systems, the semi-natural
environment may deteriorate. CAP support can play a pre-eminent role in
maintaining threatened agricultural systems, notably through LFA measures,
particularly in marginal areas where agricultural activity would otherwise cease.
In addition agri-environment measures form a key part of efforts to preserve
farm-dependent biodiversity in these areas. They are therefore a major ongoing
and practical element of the Community’s approach to the protection of
biodiversity.
Although 20% of the agricultural land in the EU is currently covered by agri-
environmental undertakings which exceeds the initial 15% target set out in the
5th Environmental Action Programme to be achieved by the year 2000, only five
Member States account for 86% of the expenditure. Uptake of programmes is
generally low in highly productive and intensive agricultural areas. Biodiversity
in these areas may come under increasing pressure.
19 Rösler, Stefan and Weins, Christof (1996): Aktuelle Entwicklungen in der Landwirtschaftspolitik
und ihre Auswirkungen auf die Vogelwelt (Vogelwelt 117:169-185).

17
2.6. Landscape
A more complete picture is described with reference to an entire landscape. A
comprehensive analysis of a landscape enables identification of all processes
and features in a holistic way. From this description, policy choices can be more
easily made to express the desired direction for development. Competing
interest need to be balanced and positive elements maximised and negative
aspects reduced.
A landscape can be regarded as a system comprising a specific geology, land
use, natural and built features, flora and fauna, watercourses and climate. To this
should be added habitation patterns and socio-economic factors. Farming may
not feature in every landscape, but covering 51% of EU territory, agriculture
remains the main land use. Thus farmers have historically and to a large extent
unwittingly been responsible for the development and stewardship of the
landscape. They have provided environmental, social and amenity benefits for
free, while pursuing the production of food, fibre and fuel for subsistence of for
profit.
In particular, the preservation and improvement of landscape quality permits the
meeting of needs of people who wish to have an authentic experience of the
countryside, close to nature and away from crowded areas; landscape is
therefore an essential component of the tourist potential of rural areas.
The physical landscape is inextricably linked to the farming practices, which
have shaped it. As with biodiversity, the landscape may be threatened by the
abandonment of farming or by changed practices.
When the farmed landscape was created, the driving force was economic
necessity and the response of farmers was the adoption of the best available
agricultural technology. Thus stonewalls were needed to clear fields and to
control stock. However, technology has moved on the extent that imperatives
are now completely different. No commercial farmer would today contemplate
building a stonewall in place of a fence; the market for pollarded willow is no
longer there. Instead the farmer who chooses economically efficient agricultural
practice in 1998 finds that many traditional landscape features have to be
sacrificed.
Thus stone or earth terraces may fall into disrepair, leading to erosion and even
to loss of farming potential. Stonewalls are expensive to restore and their
agricultural function is superseded by the electric fence. The living landscape,
such as pollarded and coppiced trees, small and irregular fields, farm woodlands
and hedgerows, a diverse mosaic of land uses, and traditional rotation patterns,
including perennial ley and fallow, are also threatened by the commercial
realities facing farming.
In marginal farming areas, preservation of the cultural landscape faces a double
challenge. Not only does society desire farmers to adopt certain environmental
practices, but they must remain on the land in the first place. Abandonment or
near-abandonment manifested as under-use, neglect or farm amalgation, is a
reality in parts of the EU and it is clear that when farming declines, scrub and
forest encroach and the open landscape will disappear. In productive areas,

18
farmers will be under pressure to maximise output and remove landscape
features.
Many programmes exist in Member States to meet the costs of preserving the
landscape and its cultural heritage under the agri-environment regulation. In the
less-favoured areas, compensatory allowances are designed to encourage
farmers to maintain, and not to abandon the countryside.
3. POLICY REFORMS
3.1. Developments in the overall policy context
In 1995 the Commission undertook a review of the outlook for the markets and
the necessary policy adjustments which may be needed. In particular, a strategy
paper20 was presented to the Madrid European Council in December 1995. This
document concluded that reform would be necessary for internal reasons within
the EU in order to ensure the balance of supply and consumer demand and to
respond to environmental and consumer concerns. The review also covered the
situation in the light of enlargement to central and eastern European countries.
The strategy paper recommended a continuation of the direction of reform taken
in 1992; that is to promote competitivity by reducing guaranteed prices, to
increase decoupled direct payments, and to reinforce rural development policy.
This approach was endorsed by the heads of state and government at Madrid.
In 1996 the Commission organised the Cork conference on rural development21
bringing together experts in rural development from around the EU. In this
forum, ideas were developed for the achievement of a sustainable and coherent
rural development policy, based on regional needs and potential, with farming
policy at its core.
In relation to the agri-environment programmes, their evaluation has been a
priority of Commission implementation policy22. In 1996 the legal obligations of
the Member States to evaluate their programmes were clarified23 and since then
evaluation reports have been produced by the responsible authorities. As a result
of the evaluations and review of programmes, adjustments have been made to
most programmes, a process, which will continue. Most developments in
programmes are designed to ensure that the environmental benefits delivered are
maximised and that payment rates are appropriate in order to avoid over- and
under-payment. In November 1998 the Commission published an evaluation
20 Agricultural Strategy Paper COM(95) 607, presented by the Commission to the European
Council, Madrid, December 1995.
21
“European Conference on Rural Development: Rural Europe - Future Perspectives”, Cork,
Ireland, 7-9.11.1996.
22 See also Report on application of Regulation (EC) No 2078/92, COM(97) 620, 4.12.1997,
sections 3.5, 3.6 and 4.3.
23 Agri-environment implementing regulation: Commission Regulation (EC) No 746/96, OJ L 102,
25.4.1996, p. 19, as amended by Commission Regulation (EC) No 435/97 of 6.3.1997, OJ L 67,
7.3.1997, p. 2.

19
document concerning agri-environment programmes based on 150 reports
received from Member States. It detailed the many positive impacts of the
programmes as well as some failures and shortcomings.24
In July 1997, the Commission published a communication entitled AGENDA
200025. This contained the results of the policy review, in particular perspectives
for financing and for the operation of the CAP following the 1992 reforms, and
recommendations for the way forward. Following consultations, in particular
with the European Parliament and the Member States, the broad strategy for
market changes and an outline of plans for rural development policy were then
elaborated into the legislative texts proposed by the Commission26 in March
1998.
In February 1998, the European Commission adopted a Communication to the
Council and to the Parliament on a European Community Biodiversity Strategy
(COM (1998) 42) which defines the policy orientations to integrated
biodiversity concerns and agriculture. The Council, in its Conclusion of 16-17
June 1998 and the European Parliament in its Resolution of 20 October 1998,
endorsed this strategy. The Strategy requires the development of an action plan.
In June 1998, the Commission adopted a Communication to the Council and the
European Parliament, Climate Change - towards an EU post-Kyoto strategy.
This document provides an analysis of how the European Union could shape a
strategy to meet its Protocol Commitments involving the sharing of
implementation responsibilities, flexible mechanisms, monitoring and a
strengthened dialogue with third countries. It identifies priority areas for
agriculture as intensified research, appropriate afforestation measures,
promotion of renewable energy crops, methane and nitrous oxide emission
reduction27.
The European Council at Cardiff in June 1998 inter alia endorsed the principle
that major policy proposals by the Commission should be accompanied by its
appraisal of their environmental impact. It notes the Commission’s efforts to
integrate environmental concerns in all Community policies and the need to
evaluate this in individual decisions, including on AGENDA 2000. It invited all
relevant formations of the Council to establish their own strategies for giving
effect to environmental integration and sustainable development within their
respective policy areas. It invited among others the Agriculture Council to start
this process.
The European Council in Vienna in December 1998 reaffirmed the commitment
to integrate environment and sustainable development into all Community
24 Working Document VI/7655/98 – State of Application of Regulation 2078/92 – Evaluation of
Agri-environment Programmes – November 1998.
25 AGENDA 2000: For a stronger and wider Union, COM(97) 2000, European Commission,
Strasbourg 15.7.1997.
26 Proposals for Council Regulations (EC) concerning the reform of the common agricultural policy,
COM(98)158 final, 18. 3. 1998, comprising 8 proposed texts.
27 COM(98)353

20
policies and invited the Agricultural Council to continue its work with a view to
submitting a comprehensive strategy, including a timetable for further measures
and a set of indicators, to the Helsinki European Council. The Council also
recognised the importance of ensuring that environmental integration is
adequately treated in the decisions to be made on agricultural policies in the
context of Agenda 2000.
3.2. Environmental elements of the CAP reform under Agenda 2000
3.2.1. General orientations
As is clear from Section 2, the instruments of the CAP form only a part of
Community policy towards the protection of the farmed environment. In
addition, to measures cited, most Member States have their own environmental
policy measures to prevent pollution, to set limits on farming activities which
cause negative environmental effects, and to preserve their natural heritage.
Of course, the full context of the CAP proposals needs to be considered. This
reform aims to prepare Europe’s agriculture for the 21st century and
enlargement of the EU.
The internal pressures on domestic markets, resulting from increased
productivity and a slower increase or even a long-term decline in consumption
in some key sectors (notably cereals and beef), have led to the conclusion that
farming must become more efficient and respond better to consumer demands.
In the international context, Europe needs to be in a position to take advantage
in the expected growth in global consumer demand for many products, such as
cereals, beef, value-added milk products.
To respond to these challenges, farmers will have to assess their practices
carefully, and further optimise their use of factors of production. However, in
order to ensure that the necessary re-orientation of the CAP and European
agriculture does not lead to an environmentally damaging intensification of
production and abandonment of marginal land, policies are required to develop
EU agriculture on a sustainable path, ensuring an environmentally sound,
economically viable, and socially acceptable European model of agriculture.
The philosophy underpinning the environmental aspects of CAP reform is that
farmers should be expected to observe basic environmental standards without
compensation. However, wherever society desires that farmers deliver an
environmental service beyond this base-line level, this service should be
specifically purchased through the agri-environment measures.
The Commission’s strengthened approach to environmental integration into
agriculture within CAP reform, contains a number of core elements, which
together lay the foundation for European agriculture, which both respects the
environment and contributes to its protection and enhancement. The
reorientation of the CAP under Agenda 2000 should also be considered as a
significant part of the future framework for a biodiversity action plan and
agriculture’s contribution to combating Climate change.

21
3.2.2. The horizontal regulation
The horizontal regulation establishing common rules for direct support schemes
under the CAP would apply to payments granted directly to farmers, except
those provided for under rural development.
As a general rule, it would oblige Member States to apply environmental
measures they consider appropriate in view of the land used and the production
concerned. In fulfilling the obligation, Member States would have three options
at their disposal28. In the first place, implementation of appropriate agri-
environment measures applied under rural development programmes may be
sufficient. Secondly, the Member State may make the market payments
conditional on observance of generally applicable mandatory environmental
requirements. Thirdly, Member States may attach specific environmental
conditions to the grant of payments under a market regime where the
environmental situation requires additional efforts.
Member States would have to decide on any appropriate sanctions for non-
respect of the conditions they have set down. This could include a reduction or
cancellation of the benefits accruing from the support schemes.
This could allow Member States to ensure that environmental improvements
achieved for certain farms and regions were not undermined by other production
practices in the same region leading to pollution.
The application of the proposal by Member States should therefore enable them
to improve the balance between intensive agriculture and the environment. This
would eliminate damaging features of intensive agriculture and improve the
image of agriculture as a sector in harmony with the environment. Society in
general, although prepared to take into account legitimate social and economic
interests, does not expect CAP funding to lead to environmental degradation
which it, in turn, would have to pay to restore.
Although proposed by the Commission prior to the Cardiff Summit of June
1998, the measures mentioned under the horizontal regulation present a
significant step into the direction laid down by the Heads of State and
Governments at that meeting.
Cross compliance has a great potential, if well implemented by the Member
States, to contribute to environmental improvement and sustainable
development in agriculture.
While very intensive and frequently non land using agriculture is often not
supported by direct payments from the EU, it too places increasing strain on the
environment. Society may reasonably expect that activities in these sectors
should not result either in degradation. Member States may therefore wish to
28 Horizontal Regulation, Article 3.

22
integrate the application of environmental measures within a broader national
framework.
The application of environmental measures needs to be considered in the light of
two factors. Firstly, the main message of the AGENDA 2000 CAP reform
proposals is to increase competitivity. The Commission does not intend to
undermine the competitive position of farmers by adding excessive
environmental conditions beyond what is reasonable for farmers to provide. In
fact, this will strengthen the position of the large majority of farmers who
already comply in practice with environmental standards as it would be unfair to
reward those farmers gaining an unfair competitive advantage by making
excessive and damaging demands on environmental resources. Where farmers
provide services to the environment beyond the base level of good agricultural
practice, these should be paid for through the agri-environment mechanism.
The second factor is that the farm sector needs to take account of the legitimate
demands of society that agricultural activities should not pollute the
environment, nor lead to severe erosion, nor destroy cultural landscape features
valued particularly highly by society. Thus, the application of measures referred
to in the horizontal regulation, including agri-environmental measures,
environmental legislation and cross-compliance, is a key element in assuring a
farm practice observing minimum environmental requirements while
maximising competitivity. To this end, Member States would have to apply
them in such a way as to ensure equal treatment between farmers and to avoid
market and competition distortions29.
3.2.3. Common market organisations
In addition to the powers available under the horizontal regulation, several
specific environmental measures have been suggested to be included in the
market regimes under examination (arable, beef & veal and milk & milk
products30). The relevant measures concern the conditions under which direct
payments are delivered. In the case of the beef regime, payments would be
structured to give extra assistance to extensive farms, defined by reference to a
stocking density of 1. 4 LU/ha. This measure, strengthened both in terms of
funding and definition, would provide both market and environmental benefits
in addition to contributing to the improvement of the image of part of beef
production.
In the case of the beef and dairy market regimes, the Commission proposes to
reserve a substantial part of the overall funding to be placed at the disposal of
the Member States to support the sectors through direct payments according to
special needs. This funding could be granted on an area basis which would
reduce the incentive on farmers to over-stock land, in particular, under the beef
29 Horizontal Regulation, Article 5(1).
30 On-going reforms of the Tobacco and Olive Oil regimes are not covered in this paper as they are
not included in the AGENDA 2000 document.

23
proposals Member States would have to establish a stocking rate31 which takes
account of the environmental impact of the type of production concerned and
the environmental sensitivity of the land32.
For the basic beef premium, payments are only made on animals up to 2 LU/ha.
For the additional extensification premium, the maximum level of 1.4 LU/ha is
calculated on the basis of the total number of adult bovine animals and sheep
and goats33.
In the arable sector, in addition to the measures under the horizontal regulation
cited above, Member States would have to take the necessary measures to bring
the provisions of relevant environmental conditions to the attention of farmers34.
Concerning set-aside, the Commission proposes to retain this production-control
instrument but, given the market outlook, the initial rate for compulsory set
aside will be 0%. Voluntary set-aside can be established for up to 10% of the
base area for up to 5 years35. Where set-aside is allowed, Member States would
have to apply appropriate environmental conditions to correspond to the specific
situation of the land36.
3.2.4. Rural development measures
The new approach proposed by the Commission in relation to rural areas builds
on the conclusions to the Cork conference on rural development. In essence,
regions will be invited to develop integrated programmes for the sustainable
development of rural areas37. The programmes are to be developed following
prior appraisal to achieve inter alia impacts on the rural environment. The agri-
environment measures would form a compulsory part of all rural development
programmes to apply throughout the territories of the Member States38.
In line with the general philosophy, rural development measures would be
applied subject to the condition that minimum environmental standards should
be observed or attained as a result of the action39. For activities going beyond
the application of base line standards, agri-environment measures would
normally be foreseen.
Moreover, the tourist potential based on good environmental conditions of rural
areas enables the diversification of economic activities to be considered; this
requires a sustainable and integrated approach in order to meet the quality
requirements of tourists, to improve the situation of local businesses and
31 Beef, Annex VI, Section III, stocking rate includes all beef animals, but not dairy cows.
32 Beef, Article 14(2)(b).
33 Beef, Article 11(2), Note: only sheep and goats for which premia are paid are counted.
34 Arable, Article 8(3).
35 Arable, Article 6(5).
36 Arable, Article 6(2).
37 RDR, Article 1.
38 RDR, Article 41.
39 RDR, Measures realted to agriculture: Articles 5 (investments), 8(1) (young farmers), 11(2) (early
retirement), 24(1) (improving processing and marketing) and 28(2) (forestry).

24
communities and to preserve the natural (landscape and biodiversity) and
cultural (architecture, handicrafts, traditions) heritage.
Concerning the grant of assistance for farm investments, specific provisions are
suggested for investments which preserve and improve the natural
environment40 and it is no longer necessary to prove that the investment itself
will lead to greater farm profitability, although the farmer would still be
expected to make a financial contribution to these investments.
Concerning training of farmers, the new proposals bring together the training
available under the structural measures and under the agri-environment
regulation. In particular the training would be designed to assist farmers to
protect better the environment and apply practices compatible with the
maintenance of the landscape41.
In a coherent and integrated approach, a number of measures from the rural
development regulation (e.g. investment, training, agri-environmental measures,
processing and marketing) can be targeted to promote organic farming, bio-
diversity and combating climate change. The Agenda 2000 CAP reform
proposals, and the completion of the long outstanding livestock amendment to
Regulation (EEC) No 2092/91 on organic farming can add to a more dynamic
development of the organic sector, while avoiding distortions of competition,
with the aim to lead to sustainable organic production and distribution.
Agri-environment measures, measures in Less Favoured Areas (LFA) and
measures concerning forests form part of rural programmes. These measures are
described in the following chapters.
3.2.5. Agri-environment measures
The core of the Community’s environmental strategy within the CAP has been
the application of the targeted agri-environment measures throughout the
territories of the Member States42. The agri-environment programmes offer
payments to farmers who, on a voluntary and contractual basis, provide
environmental services to protect the environment and maintain the countryside.
These services improve the quality of life in the countryside and can contribute
to the diversification of economic activities, in particular through tourism. Such
40 RDR, Article 4.
41 RDR, Article 9.
NOTE : DRAFT LEGISLATION UNDER AGENDA 2000 CITED IN TEXT
“Arable”: Proposal for a Council Regulation establishing a support system for producers for certain arable
crops, 98/0108 (CNS);
“Beef”: Proposal for a Council Regulation on the common organisation of the market in beef and veal,
98/0109 (CNS);
“RDR”: Proposal for a Council Regulation on support for rural development from the EAGGF, 98/0102
(CNS);
“Horizontal”: Proposal for a Council Regulation establishing common rules for direct support schemes
under the common agricultural policy, 98/0113 (CNS).
42 RDR, Articles 20-22 and 41(2).

25
payments are also open for bio-mass and bio-fuels, provided that environmental
protection is ensured.
The payments are based on the costs incurred and income foregone by the
farmer who carries out the environmental activity. In addition, where necessary,
a limited incentive element may be added43. The application of the agri-
environment regulation up to 1997 was set out in a Commission report44 to the
Parliament and Council, which included detail of the Commission’s approval
policy.
Existing policy lines as described in the report are continued in the proposed
rural development regulation with a clear focus on support for agricultural
methods designed to protect the environment and to maintain the countryside
(agri-environment) which shall contribute to achieving the Community’s policy
objectives regarding agriculture and the environment.
The agri-environment measures cover ways of using agricultural land, which are
compatible with the protection and improvement of the environment, the
landscape and its features, natural resources, the soil and genetic resources. This
includes organic farming and other low-input farming techniques, agricultural
practices needed to support the nature protection value of NATURA 2000, set-
aside for environmental purposes, and the environmental maintenance of
abandoned farmland45.
The policy proposals also expressly cover the environmentally favourable
management of low-intensity pasture systems, and a new measure for the
conservation of high nature farmed environments which are under threat, for
example from erosion, abandonment or fire, is introduced. Concerning the
upkeep of landscape features, the maintenance of historical farmland features is
included as well. Finally, the use of medium-term and long-term environmental
planning would be expressly promoted46.
Payment would only be made for measures, which go beyond the application of
good agricultural practice47, which implies that the farmer already respects
minimum environmental requirements. The costs of any necessary non-
remunerative capital items, previously excluded, would be taken into account in
setting payment rates 48.
Concerning the level of Community and Member State contribution, the similar
levels are set as for other rural development measures (broadly, up to 75% for
Objective 1 areas and up to 50% for other areas), but the Community maximum
contribution may be raised by 10% for measures of particular environmental
43 RDR, Article 22.
44 COM(97)620, 4.12.1997, Report on the application of Regulation (EEC) No 2078/92.
45 RDR, Article 20.
46 ibid
47 RDR, Article 21(2).
48 RDR, Article 22(1).

26
merit49. The schedule of maximum co-financible amounts would be greatly
simplified from the 12 levels at present,50 which differ according to measure and
land use, to 3 levels dependent only on land use51. In general, the cofinancible
margins would be increased compared with the present limits52. For particularly
costly measures, which cause farm losses exceeding these limits, Member States
may top-up the difference provided the full payment is justified on the same
criteria53.
Agri-environment measures would only cover services which are not financed
by other measures, in particular the compensatory allowances and common
market organisations54. However, agri-environment payments would be a
necessary adjunct to direct support payments where the latter do not cover the
full income foregone or net costs. For example, environmental considerations
may suggest extensive management for beef cattle at specified stocking
densities for certain zones. Should this involve net costs or income loss to the
farmer not covered by the beef market premia, including the extensification
premia, then the balance may be the subject of an agri-environment payment.
Despite considerable moves towards greater subsidiarity contained in the
AGENDA 2000 proposals, the CAP remains a common, Community policy and
the agri-environment volet forms an essential part of that policy. For this reason,
the Commission proposes continued compulsory application of the agri-
environment measures throughout Member States, while all programmes remain
voluntary for farmers. In line with this an increase in application of the agri-
environment measures is foreseen. Currently an amount of ECU 2,8 billion per
annum is mentioned in the budget evaluation for Agenda 2000 for the
accompanying measures. Experience of the 1992 introduction of agri-
environmental measures showed that actual application of measures can be more
ambitious than estimates. Member States would be able to transfer moneys
saved, through the restriction of direct payments by modulation of direct
payments or application of environmental cross-compliance, to the agri-
environment budget55,
3.2.6. Compensatory allowances in less-favoured areas
In designated areas subject to handicaps to farming, the payment of
compensatory allowances would be continued within the proposed rural
development regulation56. The main objectives remain broadly unchanged,
namely to assure continued farming in the less-favoured areas, to contribute to
the maintenance of a viable rural community, to preserve the landscape and to
promote the continuation of sustainable farming in areas where it is necessary
49 RDR, Article 45(2).
50 Regulation 2078/92, Article 4.
51 RDR, Article 22(2).
52 RDR, Annex (cf. Regulation 2078/92, Article 4).
53 RDR, Article 49(3).
54 RDR, Articles 21(2), 35(3) and 36.
55 Horizontal, Article 5(2).
56 RDR, Articles 13-19.

27
for the protection of the countryside57. In addition, a specific provision is
included to clarify that the payments may cover the costs of complying with
obligations under environmental legislation58. The Commission proposes to
make all payments of compensatory allowances on an area basis59, thus avoiding
any tendency to overstock resulting from the current headage payments.
In parallel with the provisions suggested for introduction into the market
regimes by the horizontal regulation (which does not apply to the compensatory
allowances), farmers are expected to follow normal standards of sustainable
farming as a condition of receiving compensatory allowances60. The rules of
good agricultural practice, defined for the area concerned would include a level
of environmental prudence, which a reasonable farmer would apply anyway,
including respect of environmental legislation.
Mountain areas, areas north of the 62nd parallel and other less-favoured areas
are defined with reference to the handicaps to farming imposed by altitude,
slope, climate or poverty of the soil which lead to pressures for abandonment61.
Such areas are often of high nature and landscape value, where the cessation or
diminution of farming care would threaten the landscape and lead to a loss of
biodiversity value. In these areas, the continuation of environmentally beneficial
agriculture may require a substantial effort on the part of the farmer, and where
costs exceed the level of compensatory allowances, Member States and regions
will need to promote additional agri-environment measures to assure in
particular the preservation of high nature value farmed landscapes and
environmentally beneficial low intensity systems62.
In addition to the mountain and other less-favoured areas, Member States would
be enabled to continue to designate areas subject to specific handicaps where
farming should be continued in particular to protect the environment, preserve
the tourist potential of a region and to protect the coastline. Such areas could
include zones subject to mandatory environmental conditions63. The area
covered by this provision is extended from 4% to 10% of the territory of the
Member State64.
3.2.7. Sustainable management and development of forests
Support for forestry shall promote sustainable management and development of
forests65. Forests play an essential protective role in the preservation of the
natural environment notably regarding water and soil protection, improvement
57 RDR, Article 13 (cf. Regulation (EC) No 950/97, Articles 17, 22, 24 and 25).
58 RDR, Articles 13, 4th indent, and 15(1).
59 RDR, Article 14(2).
60 RDR, Article 14(2), 3rd indent.
61 RDR, Articles 17 and 18.
62 RDR, Articles 20, 2nd and 3rd indents, and 21(2), 2nd sub-paragraph.
63 RDR, Article 19(1).
64 RDR, Article 19(2).
65 RDR, Article 27.

28
of the quality of the air, prevention of avalanches, contribution to the climatic
stability, etc.
The chapter on forestry provides for support for a whole range of actions to
promote the sustainable management of forests and to ensure the protection of
our forest heritage. The measures include: forest protection measures in
particular regarding forest fires66, afforestation and restocking measures adapted
to local conditions, compatible with the environment67, preserving and
improving of the ecological value of woodlands, restoring damaged forests, and
ensuring the protective function of forests in particular of those whose protective
and ecological functions can not be solely assured by income from silviculture68.
The introduction of a new compensatory payment along above lines would
constitute a relevant step towards the preservation of the most environmentally
valuable forests of the EU.
Moreover, the Commission, following a resolution of the European Parliament,
has in November 1998 adopted a communication on a European Union forestry
strategy, and the principle of integration of sustainable development and
environmental protection into forestry related policies has been retained as a
guiding principle of the strategy.
Under the Commission’s priorities, projects can be found which combine
activities to provide energy from wood residues with measures to combat forest
fires. As a matter of fact, a cause for forest fire is residues remaining in woods
and, therefore, using them as bio-fuels contributes to combat forest fires.
However, care needs to be taken to ensure that, where bio-mass from forest
residues is to be promoted for its beneficial contribution to the carbon cycle, this
promotion should not result in a reduction in bio-diversity.
4. DEVELOPINGAGRI-ENVIRONMENTAL INDICATORS
The Councils in Cardiff and Vienna underlined the importance of developing
environmental indicators. Environmental indicators help to transform physical
and monetary data about human activities and the state of the environment into
decision supporting information. With the help of environmental indicators it is
possible to better understand complex issues in the domain of agriculture and
environment, to show developments over time, and to provide quantitative
information. All of these are needed for targeting and monitoring.
A coherent system of environmental indicators should go beyond single
environmental media and themes. A piecemeal approach does not fully take into
account that the environment is a comprehensive system, where composition
and interaction of its constituent elements matter. With respect to agriculture, a
“systems approach” is even more important, since agriculture itself interacts as a
66 RDR, Articles 27 and 30.
67 RDR, Articles 28 and 29.
68 RDR, Article 30.

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system with the environment. Understanding agriculture in its multiplicity of
positive and negative environmental effects would require taking into account
the full context of such an interaction. A meaningful spatial context of agri-
environmental indicators can be provided by the concept of “landscapes” as the
cultivated, partly semi-natural space within which agricultural production takes
place and which is characterised by the totality of its bio-physical and cultural
features.
Developing environmental indicators relating to agriculture requires a
differentiated approach, reflecting regional differences in economic structures
and differences in natural conditions. The available, most often highly
aggregated data on livestock, fertilizer and pesticides may provide some
valuable insights, but can - due to a missing regional differentiation – also be
misleading.
The shortcomings of a lacking spatial or thematic differentiation can be
illustrated with data on agricultural inputs: the development of fertiliser use has
a meaning, only if set into relation with the development of the fertiliser uptake.
Where decreasing nitrogen balances can be identified at the national level, this
should not disguise the fact that a significant nitrogen surplus may exist in
certain areas. Similarly, observations can be misleading, if they are not
sufficiently specific: as stated in chapter 2.1.1, the identification of a declining
use of pesticides could result from changes of in the type of substance applied
which does not necessarily imply an improvement in environmental terms.
Regional (NUTS2) Nitrogen balances, which take into account not only the
inputs of fertilizers and spreading of animal manure, but also the uptake of
nitrogen by crops have been compiled by Eurostat. These balances can be used
as indicators to identify clearly areas where the ground water may be at risk, and
to indicate where further investigation into the vulnerability of ground water
may be needed.
Other activities in the field of environmental statistics and indicators carried out
by Eurostat include the work on the emissions of greenhouse gases from
agriculture, the compilation of data on individual pesticides used by different
crops in EU countries, and the identification of quantifiable indicators for
'Landscape'.
With respect to the use of agri-environmental indicators for the monitoring of
rural policies and agri-environmental programmes, indicators have to reflect
site-specific features and programme criteria in order to be meaningful. General
indicators, which are more readily available, tell little about the performance of
specific policies. Specific and spatially differentiated information would be
needed to indicate shortcomings or merits of rural and agri-environmental
policies.
The implementation of indicators must be based as far as possible on existing
statistics. It should be avoided, however, that it is too much driven by current
data availability. It is necessary to intensify the efforts on the conceptualisation
of indicators and to launch, at the same time, reflection groups concerning data

30
requirements in order to meet the new needs. It will be necessary also to make
sure that the adequate statistical tools will be established.
This will remain a priority in the work of the Commission over the coming
months and years.
5. CONCLUSIONS
The relationship between agriculture and the environment is not static.
Agriculture has intensified and intensification has in turn increased pressure on
the environment. The desired relationship between agriculture and environment
can be captured by the term „sustainable agriculture“.“Sustainable agriculture“
would call for a management of natural resources in a way which ensures that
the benefits are also available in the future. It has to be ensured that
environmental integration is adequately treated in the decisions to be made on
agricultural policies within the context of Agenda 2000.
Five main objectives cover the CAP reform proposals of the Commission: to
increase competitiveness; to assure food safety and food quality; to maintain a
fair standard of living for the agricultural community and stabilise farm
incomes; to better integrate environmental goals into the CAP and to develop
alternative job and income opportunities for farmers and their families.
Making the CAP more acceptable to the citizen in the street, to the consumer, is
one of our primary task in the years ahead. The various roles performed by
farmers, in particular in maintaining and conserving the countryside, are
increasingly under close scrutiny by society. On the one hand farmers must
reach the minimum standard of environmental care demanded by society
including observance of compulsory legislation; on the other hand, if society
wants farmers to provide environmental services beyond the basic level of good
agricultural practice, they should be paid for their costs and incomes losses in
delivering these public benefits.
The Commission’s proposals are balanced and provide Member States and
regions with the instruments necessary to assure that minimum environmental
standards are observed and to promote the conservation and improvement of
Europe’s unique environmental heritage.
The Commission underlines the importance of ensuring that environmental
integration is adequately treated in the decisions to be made on agricultural
policies in the context of Agenda 2000. The Commission will continue to
monitor and evaluate progress towards full integration.