Essay Example on AEP funding in the US is more targeted than in the EU

AEP funding in the US is more targeted than in the EU and it is also more competitive In the U S there are more funds requested than are available The CRP uses a competitive auction to process bids In this way opportunity costs are automatically considered in the selection process As funding is competitive farmers are forced to be reasonable in their requests in order to improve their chance of approval They would not however submit a bid that is lower than the opportunity cost of production loss because this would not be profitable to them This improves honesty in the bidding procedure and serves to prevent AEP funding from covering more than true opportunity cost In the EU seeking payments is often not a competitive process Instead the member states calculate the opportunity costs and any additional payments Additional payments above opportunity costs may be made to farmers to provide incentive to participate in the AEP program According to Baylis et al 2008 using competition in AEP payment decisions provides more cost effective results because more benefits will be achieved with the money spent In using competitive programs the U S ensures additionality 

Ensuring additionality means ensuring that the program has an effect that otherwise would not have occurred in its absence Careful use of funding is important in ensuring additionality because wasted money could be used instead to further AEP goals The U S pursues additionality in its AEP programs by using competitive targeted approaches to conservation as previously discussed Funds are directed specifically to where they will create the best impact and selection procedures ensure that more funding is not given than is necessary An additional way to prevent overpayment in the U S is the use of co payments When costs are shared between the producer and the government this helps to maintain reasonable funding requests On the other hand co payment requirements are absent in the EU In this region there are ways for farmers to earn money without creating additionality as funding is readily available instead of competitive One only must commit to certain practices to receive funding regardless of expected benefit In this way producers may be paid unnecessarily to use methods they may have performed anyway 

An additional concern for additionality is that European producers may be paid to use environmentally sensitive practices on land that perhaps is not environmentally sensitive The difference in how the U S and the EU handle their AEP funds is due to variation in their governmental structures The agri environmental policies and programs are implemented at different levels Even though they have totally different basis for compensation both regions base their agreements on land use instead of the amount of service produced Inspections to check compliance are carried out on a yearly basis with the EU inspecting 5 of AEP and LFAs beneficiaries and the U S randomly inspecting 5 of EQIP farmers These annual inspections however are not always fully implemented and if they are the penalties for non compliance are not well enforced In the EU it is fundamentally due to slow development of monitoring infrastructures and differences in the use of AEPs by member states While in the U S there is a fear of decreasing participants involvement in the program especially from those areas in need of conservation While monitoring and compliance are still challenges conservation expenditures are probably to continue as part of the policy as well as the permanence of farmers and retaining of contracts In the U S there has been a permanent increase of federal funding and a satisfactory feedback from farmers that consider the program economically beneficial 

Similarly EU AEPs have a strong public support especially from the green consumers that increasingly demand for more organic farming and positive externalities deriving from the agriculture As it was already mentioned EU programs are keen on transferring income to farmers rather than minimizing undesirable externalities In this way AEPs are expected to remain and probably increase as now more extra benefits are given to producers complying with the regulations 3 Conclusion EU AEPs direct mainly agriculture s positive externalities whereas U S AEPs primarily focus on agriculture s negative externalities Regarding undesirable externalities EU policy favors extensification addressing negative externalities that derive from the intensification of farming unlike the U S counterpart that address externalities produced by extensification In contrast to the U S agri environmental payments that are mainly based on predicted environmental impacts related to certain activities 

EU payments are usually granted on the promise of applying technology or agricultural methods that are deemed to be environmentally friendly Furthermore in the U S seller selection process is stricter and based on the opportunity cost it is also considered to be more suitable for optimizing environmental benefits compared to the EU process One of the possible drawbacks of program targeting is the increase in transaction costs particularly in the absence of environmental data showing specific geographical distribution of different alternative areas Finally there is a consensus among the EU citizens on the aesthetic value of agricultural landscapes The WTP for this agricultural positive by product is relatively higher compared to the U S counterpart where the currently adopted conservation framework is not designed to respond to the demands for more agricultural landscapes In both regions the budgets of AEPs are still slightly lower to what could be desirable although it has continuously increased over time