Agriculture

Environmental Tax Reform in Agriculture

Environmental problems in intensive agriculture
Since the beginning of the Common Agricultural Policy (CAP) in the European Union in the 1950s, the productivity of agriculture has increased enormously. The increasingly intense cultivation of agricultural areas has been and is accompanied by significant environmental damage. The negative environmental impacts range from contamination of soil and water with nitrogen compounds and pesticides, through to soil erosion and considerable contributions to the green house effect, to the loss of biodiversity.

The negative environmental impacts are reinforced by various fiscal measures in agricultural policy. Critics of agricultural subsidies have for some time been calling for environmental considerations to feature more prominently in agricultural subsidies and for environmentally harmful subsidies to be reformed or abolished entirely. Moreover, they are demanding the introduction of the polluter pays principle in agriculture, which could be realised to a considerable extent through a tax on pesticides and fertilisers.

Alongside these critics, more progressive voices are calling for a fundamental change in the agricultural system. These demands range from abolishing agricultural subsidies to a tightly regulated agriculture that complies with strict environmental and social criteria. Although this more radical criticism includes some interesting points of view, this report focuses on the practical possibilities for a more ecological agricultural policy, within the present system.

The integration of environmental objectives into agricultural policy is overdue
Calls for environmental objectives to be integrated into agricultural policy are increasingly gaining prominence, due to the realisation that agricultural subsidy policy is not paying adequate attention to environmental objectives and that, in some areas, ecologically sound efforts are even being counteracted.

Further information
In 2004 GBG conducted a study in cooperation with Naturschutzbund Deutschland and Georg-Louisoder-Umweltstiftung on agricultural subsidy policy and the potential of environmental taxation. The study (in German) is available here.