The Effect of Mandatory Agro-Environmental Policy on Farm Fertiliser and Pesticide Expenditure

EU farmers are subject to mandatory cross-compliance measures, requiring them to meet environmental conditions to be eligible for public support. These obligations reinforce incentives for farmers to change their behaviour towards the environment. We apply quasi-experimental methods to measure the causal relationship between cross-compliance and some specific farm environmental performance. We find that cross-compliance reduced farm fertiliser and pesticide expenditure. This result also holds for farmers who participated in other voluntary agro-environmental schemes. However, the results do not support our expectations that farmers who relied on larger shares of public payments had a stronger motivation to improve their environmental performance.