The main objective of the report is to examine the environmental impact of the major agricultural policy reforms carried out by OECD Member countries over the last ten years. It then examines the effects on production, land use, farming practices and input use in the crop and livestock sectors that have occurred as a result of the reforms. This is followed by a discussion of the impacts of these changes on soil, water, air, biodiversity, wildlife habitat and landscape. Issues that cut across borders, such as trade-related environmental impacts and greenhouse gas emissions from agriculture are addressed in a separate chapter at the end of the study.

Main conclusions on the present development and future trends in the field of agriculture policy reform can be summarized as follows:

Policy reforms have reduced support levels and have changed the way in which support is provided. Comprehensive reform aimed at lowering the overall level of support to agriculture has so far been implemented only in New Zealand, where the government ended output price assistance for agricultural products, abolished fertilizer subsidies and terminated investment and land use development concessions. Wide-ranging reform was introduced also in Sweden, including reduction in price support, compensatory direct payments and deregulation of the internal market. Significant reduction in support also occurred in Poland, Hungary and the Czech Republic, where transition policies led to the elimination of administrated prices, reduction of input subsidies and disconnection of assistance for livestock.

Many countries have attached environmental conditions to support or have introduced financial incentives for environmental conservation, while others have relied more on voluntary, community-based initiatives. Lowering production-related support has improved resource allocation and has reduced some environmental pressures. Such an example is represented by the decreased demand for chemicals that has led to a de-intensification of crop production. The decrease in production-related support has also resulted also in some changes in environmental benefits provided by agriculture. Benefits accrued from the agricultural sector such as landscape scenery or activities associated with land conservation will also be affected. Net positive change can occur where reform includes provisions regulating the development of converted farmlands. Most countries have introduced agro-environmental measures which have improved the environment, although the achievements are uneven across countries reflecting the specific conditions under which the measures are effective.

Trade liberalization may also affect the environment, yet the size of the impact is uncertain. Trade-related pollution and environmental risks could increase while trade-related income growth might facilitate policy responses.

Domestic reform can reduce national net greenhouse gas emissions but global improvements are less certain because of increased production and emission in other countries or other production fields. Real environmental improvements will only be achieved if overall emissions per unit of food produced decline as a result of reform. Accurately attributing environmental impacts to policy change is difficult although agro-environmental indicators, such as the level of nutrient and pesticide use, the quality of soil and water, greenhouse emissions, etc. are beginning to provide key information that could be used for environmental impact analysis.

The study concludes that agricultural policy reform and trade liberalization can contribute to improving environmental performance, provided effective environmental policies are also implemented.

OECD: The Environmental Effects of Reforming Agricultural Policies. OECD Paris 1998. pp.130. For copies contact country OECD sales office or OECD Publication Service, 2 rue AndrŽ-Pascal, 75775 Paris CEDEX 16, France. http://www.oecd.org/agr/News/index1.htm