THE POTENTIAL IMPACT OF ENVIRONMENTAL CROSS-COMPLIANCE ON ARABLE FARMING

It is argued that the ongoing CAP/GATT reforms provide a basis for the introduction of environmental cross-compliance (ECC). ECC enables pol icymakers to restrict output-related direct support payments to those farmers who comply with specified environmental guidelines aimed at re ducing the external damage effects of agricultural production. This pa per is an exploratory investigation of ECC and presents the results of a farm-level linear programming analysis of 15 North-West England ara ble farms. The environmental guidelines, which relate to permanent as opposed to rotational set-aside and to levels of fertiliser use, are w idely applicable to the extent that ECC can be implemented as a volunt ary policy system. They are clearly effective in achieving policy goal s since all but one of the farmers investigated would comply with the full range of restrictions considered. Within this range, gross margin s are reduced by up to 10 per cent while area and output of seed crops are reduced by around 22 per cent and 12 per cent respectively. Row c rops area and output are more robust, each falling by just under 4 per cent.