Writing Resources
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
