1. Irish agri-environmental policies Lecture 30. Economics of Food Markets Alan Matthews

2. What we want to learn How does the Irish government promote positive environmental services We focus particularly on how the Rural Environment Protection Scheme has operated We examine issues in evaluating an agri- environment scheme We compare with what other countries do

3. Irish government policies Nature conservation –National Parks and Wildlife Service –National Biodiversity Plan Agri-environment scheme –Rural Environment Protection Scheme

4. Designated Habitats Natural Heritage Areas –These are habitats of national importance. The legal basis on which Natural Heritage Areas (NHAs) are selected and designated is the Wildlife Amendment Act, 2000. There are approximately 1200 NHAs in Ireland (750,000 ha) and are of huge importance to flora and fauna. Examples include: Tullaghan Rock Bog (Roscommon), Cootehill Church as a roosting place for Natterer's Bats (Cavan), Thomastown wet grassland and woodland (Kilkenny). Special Areas of Conservation –Special Areas of Conservation (SACs) are habitats of European importance. Their legal basis is the EU Habitats Directive. There are approximately 400 SACs in Ireland. SACs are important for flora and fauna. Examples include: The Burren (Clare), Moyclare Bog (Offaly),The Loughan Turlough (Kilkenny) Special Protection Areas –Special Protection Areas (SPAs) are habitats of European importance. Their legal basis is the European Bird Directive. They are of huge importance to birds. There are approximately 100 in Ireland. Examples include: Examples: Shannon Callows, Lough Oughter and associated lakes (Cavan), Mullet / Blacksod Bay complex (Mayo)

5. Nature conservation Designated habitats now cover about 11.5% of farmland in Ireland NPWS Farm Plan Scheme –pays farmers and landowners for losses incurred through restrictions caused by the designation of lands as an SAC or an SPA or to pay for certain actions which are of benefit to nature and are agreed in a farm plan. –Directed towards farmers who do not wish to be part of REPS

6. Facts about REPS in Ireland REPS 1 from 1994 – 1999 –over 45,500 farmers joined REPS –approximately 33% of the utilisable agricultural area was farmed under REPS guidelines; –over €590 million was paid to farmers. REPS 2 from 2000 – 2006 –DAF target was 70,000 farmers –Initially reduced uptake compared to REPS 1 – took until 2005 for numbers to reach 45,000 again –the number of REPS farmers can grow to 53,000 and over –the projected expenditure is €1.9 billion. REPS 3 2004 – 2006 –Higher payments and more emphasis on biodiversity –Expect to have over 50,000 participants in either REPS 2 or REPS 3 in 2006

7. REPS 1 Introduced 1994 for five year –First nation-wide scheme to encourage farmers to protect natural and cultural heritage Farmers enter into a 5-year contract to farm in accordance with an agri-environment plan drawn up by approved planner Maximum area for which payment is made is 40 ha, basic rate of payment €160 per ha. Scheme has 11 measures directed towards controlling nitrogen use and stocking rates, controlling waste and effluent around the farmyard, protecting water quality, hedges and archaeological or historical features on farm Extra payments for supplementary measures (organic farming, rare breeds, public access, farming in designated areas) Farmers must undergo a training course in agri-environmental management

8. REPS 1 progress YearParticipants New Participants Cumulative Area HectaresPayment € million 1994336 121 19958,4008,70028571 199613,20022,000614128 19979,00031,0001,119169 19988,20039,2001,381183 19996,30045,5531,575204

9. Carty, J., 2003, Teagasc REPS Conference Projected vs actual numbers in REPS 2

10. REPS 3 Entered into force 2004. New scheme involves higher payments and more emphasis on biodiversity. Farmers two additional undertakings. One must come from seven Category 1 options. These are the creation of a new habitat, hedgerow rejuvenation, new hedgerow establishment, additional stone wall maintenance, green cover establishment, environmental management of setaside and increased arable margins. Nine further Category 2 options are traditional hay meadows, species rich grassland, increased watercourse margins, exclusion of access to watercourses, tree planting, nature corridors, increased archaeological buffer margins, management of publicly accessible archaeological sites and landscaping farmyards. Options chosen cannot be changed during the course of the plan.

13. Evaluating REPS Additionality? –Has land management changed as a result of participation in REPS? –Is there evidence of benefits? Importance of monitoring Deadweight? –The extent to which scheme payments pay for outcomes that would have happened in any case –If management changes, the difference between what the participant would be prepared to accept, and the level of payment offered. Reversibility? –The extent to which the benefits bought by a policy can be reversed if the policy is removed. Administrative and transactions costs

14. Peterson, E., 2003, Teagasc REPS Conference

15. REPS objectives 70% of farmers agreed REPS 1 was primarily an income supplement and secondly and environmental protection scheme. 60% of planners agreed with this statement (An Taisce, 2002). OASIS categorises REPS under Income support as sub-category under Employment –“The Rural Environmental Protection Scheme (REPS) is an income support scheme for farmers run by the Department of Agriculture and Food.” Department of Agriculture and Food

16. REPS 1 evaluation Highest uptake of scheme with drystock (esp. sheep) and tillage farms, lowest uptake among intensive dairy farms Larger farms under-represented 50% of participants come from six counties (Donegal, Mayo, Roscommon, Galway, Clare and Cork) Match performance of REPS farms with non-REPS intensive (> 170 kg per ha organic N) and non-REPS extensive farms (< 170 kg limit) REPS farms had significantly increased investment (pollution control and animal housing), but no impact on total nitrogen and phosphorous output (Hynes and Murphy, 2002)

17. Hynes and Murphy, 2002 Department of Economics Working Paper No. 60, National University of Ireland Galway

19. Evaluating REPS Teagasc evidence that REPS farmers have lower fertiliser use than non-REPS farmers Self-selection bias in evaluation –If the scheme attracts extensive farmers to participate in the first place because they have little to lose through enrolment, then finding that participants have lower fertiliser use than non-participants is not really evidence that the scheme has succeeded –Use of matched samples to try to control for initial conditions. Hynes and Murphy (2002) compare changes on REPS and non-REPS extensive farms

20. Carty, J., 2003, Teagasc REPS Conference

22. Hynes and Murphy, 2002 Department of Economics Working Paper No. 60, National University of Ireland Galway

23. Enforcement issues Hynes and Murphy (2002) argue that the economic deterrents to non-compliant behaviour are small REPS 1 –44,769 farms enrolled covering 31% of agricultural land –£625 million (€794m) paid over five years –£13,996 (€17,775) paid per farm Total number of transgressions 32,818 Total value of penalties £13.6 million Average fine per transgression £415 (€527) Probability of being inspected over life of scheme 0.59 Probability of fine being imposed if transgression detected 0.7 Expected cost of non-compliance £172 (€218) –0.59 * 0.7 * 415

25. UK and Northern Ireland experience Two schemes –Environmentally Sensitive Areas which are concentrated areas –Countryside Stewardship Scheme – national coverage outside ESA

26. Countryside Stewardship Scheme Farmers are paid for conservation and public access to countryside Each Stewardship agreement runs for 10 years and is a unique package selected from a menu of over 100 different possible items Scheme is competitive and not all applications are successful All applications are assessed for their environmental ‘added value’ Standard payment rates

27. The future of REPS Aim was to increase participation to 70,000 farmers by 2006 – will reach just over 50,000 Very limited monitoring of environmental data (An Taisce, 2002) – no physical indicators collected REPS 4 now being prepared, will be part of the 2007-2013 RDP

28. Tiered approach to environmental payments

29. The future of REPS Under EU legislation, farmers can only be paid for going beyond statutory norms in farm management REPS farmers had to observe 170 kg/ha organic N limit, compared to 210 kg/ha in draft Nitrates Directive. But now this will be lowered to 170 kg/ha! –Example of Cavan bye-laws REPS is co-financed 75% by the EU and 25% by the Irish Exchequer – over €200m annually. But Irish taxpayer must fund 50% of scheme in future. EU funding comes out of the RDR envelope – is it the best use of these funds?