How does greening affect farm behaviour? Trade-off between commitments and sanctions in the Northern Italy

Two of the most important features of the CAP reform 2014-2020 are the redistribution system of direct payments and the establishment of a greening component linked to 30% of the national ceiling. Both these features may affect in a very different way similar farms located in the same area; therefore, specific tools able to estimate the effects on the individual farmers' behaviour are needed. The paper contributes to the debate on the CAP reform, assessing the farmers' behaviour in response to the greening implementation, taking into account possible sanctions in case of non-compliance with the requirements. We developed a two-step modelling approach able to estimate: i) the redistributive effect of direct payments reform for the greening and the basic payment scheme; ii) the farmers' behaviour, in terms of land use and income effects, with a positive mathematical programming (PMP) model on a Farm Accountancy Data Network (FADN) sample of Northern Italian farms, implementing the whole set of greening commitments and sanctions. Although the overall greening impact is low, some specific areas and productions are affected to a greater extent: greening causes a decrease in maize and, in some contexts, in wheat which are replaced by nitrogen-fixing crop surfaces. The consequent average income reduction is lower than 0.5% (-7 (sic)/ha) and almost all farms choose to fully apply the greening constraints in order to avoid sanctions. The weakening of greening measures during negotiations, the amount of greening payments and the sanctions system are strong incentives for farmers to fully comply with the greening practices. (C) 2016 Published by Elsevier Ltd.