• Summary & Conclusion
• part 1
• part 2
• part 3
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THE STATE OF SCOTLAND'S FARMED ENVIRONMENT 2005

32. EXISTING POLICY COMMITMENTS AND POTENTIAL FUTURE POLICY DEVELOPMENTS FOR SCOTLAND WITH RESPECT TO AGRICULTURE AND THE ENVIRONMENT

Integrated Approach to Land Use Policy

It is clear from Table 32.1 that the commitment to the different government commitments, obligations and strategies are strongly inter-related. For example, in addition to the above described relation between biodiversity objectives and commitments in the FSSA, the Partnership Agreement between the Labour and Liberal Democrat Parties in the Executive sets the target to implement Land Management Contracts (LMCs) by 2007, while at the same time the Organic Action Plan requires to take into account support for organic farming in the development of LMCs. These commitments to LMCs imply the availability of sufficient funding for LMCs, in particular Tier 3, to provide meaningful support and environmental benefits. Moreover, objectives of the Water Framework Directive (WFD) to improve water quality and the Kyoto Protocol to reduce GHG emission can only be fulfilled in Scotland if CAP implementation, the Scottish Rural Development Plan and Strategy and the FSSA explicitly take into account the objectives of the WFD and Kyoto Protocol and design policy tools and incentives accordingly. Another example is the strong relation between forestry expansion and social and cultural aspects of farming and related obligations in the uptake of forestry measures by farmers, in particular in the lowlands, which points to the need for stronger consideration between the strategies for forestry and agriculture. Overall, environmental benefits would potentially be improved by an integrated approach to define an integrated land use strategy, including aspects related to the water environment, instead of following a sectoral approach.

Future policy changes such as the new Rural Development Regulation (RDR), to be implemented in 2007 for the programme period 2007-13, have an important impact on the above commitments and objectives and the translation of such EU-wide policy changes into a national policy framework, in this case a new Scottish Rural Development Plan (SRDP), will provide scope to revise and adjust existing support for environmentally friendly land use and management. Alongside the new SRDP, Scotland will be developing a Scottish Rural Development Strategy for the first time, to form one component of the UK rural development strategy. The development of such a strategy provides the perfect opportunity to integrate high policy commitments and objectives across the wide sphere of rural development and encourage an integrated approach.

In June 2005, the Agriculture Council of the EU agreed on the new Regulation on rural development support through the European Agricultural Fund for Rural Development. The new regulation aims to make farming and forestry more competitive (axis 1), to manage land in an environmentally friendly and sustainable manner (axis 2), to improve the quality of life and diversification of the rural economy (axis 3), and to encourage bottom-up local development strategies of local action groups based on the LEADER concept (axis 4). The agreement defines rules for rural development expenditure from 2007 to 2013 setting minimum allocation of funds for each of the four axes. Compared to the initial proposal, the minimum rates for axis 1 and axis 3 have been cut from 15 to 10% each. The minimum rate for axis 2 remains unchanged at 25%, while the minimum rate for axis 4 (LEADER type schemes) has been reduced from 7 to 5% (EU-Commission, 2005; Agra Europe, 2005). However, it is important to note that only minimum rates have been defined and member states have the scope to increase spending for specific axis, for example axis 2. But due to the minimum allocation for axis 1 and 3, spending for axis 2 is constraint to 80% of the rural development budget. Historically, Scotland has spent over 90% of its limited rural development funding on axis 2-type measures (such as LFA support and agri-environment) so the ceiling that will be imposed on Axis 2 from 2007 could potentially reduce agri-environment spend. In the absence of an EU budget agreement, however, the regulation can not be precise as to how much money will be available for rural development in 2007 - 2013 and it does not tackle the issue of the allocation of rural funding per member state (Agra Europe, 2005). Budgetary agreements at EU level are not expected to be reached until late 2005 or even into 2006.

Axis 2 of the new RDR, to manage land in an environmentally friendly and sustainable manner, includes measures in relation to agri-environment, Natura 2000 management, forestry and LFA support. Strategic guidelines for the application of the new RDR and the new axes at member state level have been produced by the EU-Commission. The guidelines do not have the status of a directive, but nevertheless have to be taken into account by the member states. As outlined in these guidelines, measures in axis 2 should be used to achieve environmental objectives, such as biodiversity and preservation of high nature value farming and forestry systems, water and climate change. Moreover the guidelines require direct contribution of measures in axis 2 to the implementation of the agriculture and forestry Natura 2000 network, to the Gothenburg commitments to halt biodiversity decline by 2010, to the WFD objectives and the Kyoto protocol targets for climate change mitigation (EU-Commission, 2005). These are a number of important environmental commitments to be taken into account when axis 2 measures, including future LFA support, are designed and defined at national level. This is particular relevant for the LFASS, or any future successor of the scheme, being one of the main spending priorities in the Scottish Rural Development Plan. The nature and objective of the LFASS, to ensure that agricultural activities continue in naturally disadvantaged areas, more remote and peripheral regions, need to be more directly linked to the environmental policy commitments.

As outlined in the guidelines, axis 2 incorporates both agri-environment and forestry-environment measures, potentially increasing the integration between support for agriculture and forestry. In terms of the payment mechanisms, environment schemes with payments which emphasise positive management and providing public goods rather than providing compensation for income foregone could potentially increase environmental benefits. However, this would require changes to the new RDR which outlines that payments are based on income foregone and additional costs incurred. Moreover, from an environmental perspective and to fulfill Scotland’s environmental policy commitments it is crucial that not only axis 2 receives enough funding, but also that environmental objectives are embedded in measures aiming at increasing agricultural competitiveness (axis 1). The EC strategic guidelines will be used to guide the Scottish Rural Development Strategy and Plan.

In Scotland the new Land Management Contracts (LMCs) could provide new opportunities to further integrate farming support with wider rural development, increasing environmental benefits. As outlined at this stage, LMCs are a three-tier whole-farm support approach which combines agri-environment and socio-economic farm support in one policy approach (SEERAD, 2005b). The concept behind LMCs is of a whole farm system of support where farm businesses undertake to deliver a range of economic, social or environmental benefits in return for support payments. LMCs are seen as a method of providing payments to farmers for public goods which are otherwise difficult to capture. While Tier 1 (SFP, with cross-compliance) and Tier 2 (LMC Menu Scheme) were introduced in 2005, Tier 3 will be introduced in 2007, probably containing elements of existing agri-environment schemes, mainly the Rural Stewardship Scheme, forestry schemes, and Natural Care. However, public good provision through LMCs could potentially be improved, if LMCs form part of a wider rural development programme of measures aimed at environmental improvement. An integrated approach to LMCs as an integral part of rural development schemes is likely to deliver environmental advantage as joined up delivery mechanisms will ensure that sectorally focused policies do not conflict. This is important with respect to economic development programmes.

A recent study on LMCs conducted by Wright et al. (2005) concluded that environmental advantages are likely to result if the higher tiers of the LMCs take account of regional environmental priorities (such as those identified in Local Biodiversity Action Plans or the SNH Natural Heritage Futures series) and have flexibility to determine local management options. In this context, evidence from some schemes (e.g. the Goose Management Schemes which are part of SNH's Natural Care Scheme) suggests that more local involvement in setting environmental priorities and in developing detailed management prescriptions is likely to lead to more local 'ownership' of schemes and therefore likely to lead to greater uptake. Moreover, the reviews of agri-environment schemes, such as the RSS, shows that the availability of highly skilled advisors is crucial to the success of a scheme, e.g. in determining if the correct management option has been chosen for a specific site. A complex system such as LMCs, in particular if higher tiers are locally designed, requires sufficient highly skilled advisory staff with excellent local expertise and knowledge to advise and support potential applicants and contractors.

Finally, anticipated future CAP reforms such as a revision of the Single Farm Payment, for example moving from the historic-based payment to area payments, are expected to have a large impact on land management and public good provision. Changing to flat area-based system would significantly change the support level for individual farms and lead to redistribution effects of subsidy receipts between different regions in Scotland . Implementing the SFP in two stages, first as historic based payment and then after a couple of years, revising the scheme to an area based scheme would allow the farming sector to adjust to the rather big policy change over time without experiencing decoupling and higher modulation rates and redistribution effects at the same time. It can not be viable to continue with the historical entitlement single farm payment in the longer term because it will not lead to sufficient delivery of the environmental and rural development objectives sought by CAP reform, and it would become increasingly untenable to deliver public funding on the basis of the agricultural activity that went on in an increasingly remote historical period. However, while in Scotland, at this stage, no concrete intention or timetable to change the SFP to an area-based payment has been indicated, in England the SFP has been implemented as a hybrid between historic-based and flat rate payments and will be transformed to a regional area-based payment in 2012 (DEFRA, 2004).

Sources

• Agra Europe (2005): Rural development rules set post-2007. Agra Europe, No 2162, 24.06.2005, EP9 – EP11.
• Burton , R.; Schwarz, G.; Fischer, H. (2005, in press): Changes in farm labour structures on family farms and implications for the Rural Development Plan for Scotland . Journal Economie Rurale.
• Chapman, S ., Buttler, A., Francez, A.-J., Laggoun-Défarge, F., Vasander, H., Schloter, M., Combe, J., Grosvernier, P., Harms, H., Epron, D., Gilbert, D. and Mitchell, E. (2003) Commercial exploitation of Northern peatlands and maintenance of biodiversity – A conflict between economy and ecology. Front Ecol Environ 2003; 1 (10): 525-532.
• DEFRA (2004): Q&A – Modulation.
• EU-Commission (2005): Strategic Guidelines for Rural Development. External Website
• Forestry Commission (2005): Forestry Facts and Figures 2005; External Website
• Forestry Commission (2000): Forests for Scotland – the Scottish Forestry Strategy. External Website
• Schwarz, G . and Burton , R. (2005): Public good provision on common land in the Cumbria uplands in the UK : A case study for an integrated rural policy for the uplands. Paper presented at the XXI ESRS Congress, 22 - 27 August 2005.
• SEERAD (2005a): Organic Annual Report – not yet published
• SEERAD (2005b): Land Management Contracts. External Website
• SEERAD (2004): Scotland's Biodiversity: It's In Your Hands. A strategy for the conservation and enhancement of biodiversity in Scotland . External Website
• SEERAD (2003): The Organic Action Plan.External Website
• SEERAD (2000): A Forward Strategy for Scottish Agriculture. External Website
• Wright et al . (2005): Taking Regional and Local Environmental Factors into Account in a System of Land Management Contracts for Scotland . Report commissioned by SNH.