Farmers not Farming? An empirical study of the elimination of the mandatory set-aside policy in the EU.

Abstract

This thesis evaluates European farmers which were subject to mandatory set-aside entitlements for many years. Mandatory set-aside of land, required farmers to leave arable land out of production to be eligible for subsidies. The policy effect of a reform in 2008, where the mandatory set-aside policy was abolished due to inefficiencies, is studied by applying a quasi-experimental method to estimate the casual relationship between mandatory set-aside abolishment and farm environmental performance. This evaluation is relevant as the mandatory set-aside was re-introduced in 2013 and this study contributes with insights into policy implications of mandatory set-aside, as it has never been evaluated before. The difference-in-difference results show signs of improved environmental performance of farmers due to the policy change, in opposite towards the hypothesis. Thus, it does not support the expectation that more land would be used for fertiliser and pesticide due to the mandatory set-aside elimination. The results can give an indication for not re-introduce mandatory set-aside policy in the EU.