ABSTRACT
Agri-environmental schemes (AESs) and cross-compliance (CC) are the two components of the Common Agricultural Policy (CAP) most explicitly aimed at providing environmental benefits from agriculture. A large body of literature focuses on these topics (see for example Hodge 2000, Dobbs and Pretty 2004, Osterburg et al. 2005, Helin 2008). AESs have been studied under different perspectives in Europe since the beginning of the 1990s (see for example Feinerman and Komen 2003, Dupraz et al. 2002, Latacz-Lohmann 2004). Cross compliance is a more recent field of study connected to the implementation of this policy in Europe by way of the 2003 CAP reform (Fishler reform). The literature in this field has increased significantly in recent years (see for example Varela-Ortega and Calatrava 2004, Fraser and Fraser 2005, Davies and Hodge 2006, Bennet et al. 2006). Under Regulation 1698/2005, the agri-environmental scheme design rationale has been changed, with a more clear identification of a baseline for identifying the commitments and the compliance costs in order to justify payments. Such a baseline is generally identified as the commitments of cross-compliance represented by mandatory standards. The joint implementation of AESs and CC is now to be interpreted as a major component of policy design and analysis, as it sets the boundary between positive and negative externalities.
