Introduction of the Single Farm Payment (SPS) in 2005 constitutes perhaps the most radical reform of the Common Agricultural Policy ever. This payment has replaced almost all previous forms of subsidies to farmers and is decoupled, i.e. paid regardless of whether the farmer produces commodities as long as their land is kept in Good Agricultural and Environmental Condition (GAEC). Such a radical reform was expected to have a profound impact on European agriculture; in particular concern was raised about the impacts on historical landscapes and biodiversity. This paper presents the findings of a large EU project, IDEMA, on the potential environmental impacts of the 2003 CAP reform for a selection of case-study regions. Due to the complexity of the issues at hand and the lack of historical data, the assessment was based on dynamic agent-based modelling with the extended AgriPoliS model.

Our results indicated small impacts in relatively productive regions, since land use remains largely unchanged. In marginal agricultural regions, however, decoupling was shown to have a negative impact on biodiversity and landscape mosaic because of the homogenisation of land use that results from land being taken out of production. Existing agri-environmental schemes and national support acted however to buffer the full potential impacts of decoupling on landscape values in these regions.

The effects of the reform would have been more radical if there was no link between the decoupled payment and land, i.e. via the GAEC obligation. In this case the model results indicated that farmers would leave the sector at a faster rate and average farm size would increase (thereby improving competitiveness). On the other hand, significant areas of agricultural land, primarily grassland, were abandoned in the modelled high-cost or marginal regions. Hence, it might be motivated to strengthen agri-environmental schemes under a Bond-type scheme in affected regions to preserve landscape values (depending on public willingness to pay for landscape preservation).