Impact assessment of greening and the issue of nitrogen-fixing crops: Evidence from northern Italy

Abstract

In the CAP reform 2014-2020, the 'green' component of direct payments remunerates environmental services and includes three greening requirements: crop diversification, maintenance of permanent grassland and establishment of an ecological focus area (EFA). This paper evaluates the effect of 'greening' and payment redistribution on farm incomes and land use, considering two different hypotheses of the EFA weighting factor (Ewf) for nitrogen-fixing crops. The evaluation is developed at farm level by a positive mathematical programming (PMP) model and applied to more than 2,000 farms in northern Italy. The results show that crop diversification will mainly affect the cereal area, with significant reductions in maize and wheat, while the EFA requirement, especially with the lower Ewf, will boost the spread of protein crops. Nevertheless, 'greening' does not significantly affect farm income, while greater economic effects are mainly due to the redistribution of direct payments.