The British countryside is not being used to its fullest advantage, according to researchers from the University of East Anglia, who today released a report showing that radical reform of farm subsidy spending, targeting environmental improvement instead of supporting production, could turn a net loss for UK taxpayers into a major benefit.

Reporting in the prestigious journal Science, the researchers, a team of 'environmental economists', suggested that the current subsidy system has burdened the public with "considerable financial and environmental costs." They said that "allowing land use to be determined purely by an agricultural market, which is distorted by multi-billion pound subsidies," and externalising the cost of agriculture's excesses on to the public represents a "poor value for society".

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Land use in the UK is dominated by farming; the agricultural area covers 75 percent of the country's total surface area. Subsidy payments to the UK's farmers and landowners exceed £3billion per year, almost half the total annual value of the UK agriculture industry.

However, the team said that a "refocusing" of payments would provide universal benefits. They suggested that, if funding were predominantly used for protecting wildlife and habitats, mitigating pollution and improving access to the countryside for people living in cities, the positive outcomes could be worth around £18bn to the UK, amplifying the current effect of spending by three times.

Researchers repeat NEA recommendations   

The UEA report's lead author Professor Ian Bateman previously worked on the groundbreaking National Ecological Assessment, published in 2011 and commissioned by Defra, in which he made similar recommendations. The NEA report played a key role in mainstreaming the concept of 'ecosystem services' (beneficial natural functions such as insect pollination and carbon sequestration, which cost humans nothing, but would prove immensely costly if they were damaged).

Its authors stirred controversy, particularly amongst Welsh hill farmers, for suggesting farmers engaged in loss-making practices, such as sheep farming in North Wales, turn instead to improving wildlife habitat and forests, which could provide benefits for the populations of nearby urban areas like Wrexham and Liverpool, boost beleaguered wildlife populations and store carbon.

In the study released this week, Professor Bateman and his team looked at half a million land use records and worked out the environmental and social costs of the current subsidy system, in addition to the tangible financial costs. These environmental and social costs included the lack of access, limited recreation opportunities and high emissions of greenhouse gases associated with present land use. They also took into account the impact of declining wild species and biodiversity caused by intensive farming.

Using computer modelling, they looked to the future and weighed up the consequences of alternative land uses. The team assessed a range of alternative scenarios going forward to the year 2060. UEA researchers worked out an economic value for each of the 'non-market' items they identified to illustrate the positive impact they could have in a way policy makers in the government would understand.

On Thursday, Professor Bateman elaborated on his findings. He said, "There is a good case for subsidising farmers to produce the things we want which are not paid for though market prices - and that includes better habitats for biodiversity, high quality recreation areas and lower greenhouse gas emissions."  The professor said his forecasting accounted for a whole range of political, technological, environmental and financial changes that could affect land use in the future.

He continued, "We found that a conventional market dominated approach to decision making will reduce the overall values from the landscape in many parts of the country," but that a refocusing of funding, so that the majority of spending goes to provide benefits for the wider population, "would lead to net financial gains nationally, due to reduced pollution, enhanced recreation and urban greenspace, and improvements in biodiversity habitats." Professor Bateman added that notable benefits could be achieved with minimal impacts on food production, by using land that is less suited to efficient farming.

Currently, direct payments, which support production, account for the majority of CAP spending. An estimated 70 percent of spending is focused on production, with 30 percent going towards development; Professor Bateman believes this should be reversed. He said, "The clearest way to achieve this goal is to reform the EU's Common Agricultural Policy ... The vast majority of [CAP] payments are made without consideration for environmental performance. Rewarding farmers for delivery of a broad spectrum of ecosystem services would provide policy makers with a very powerful tool to secure beneficial land use change."  

"It is absolutely vital that impacts which are difficult to put a price on, such as a loss of biodiversity, should be incorporated into land use policy. But no single policy will be optimal everywhere. Our findings show that a targeted approach to decision making is the best approach," he added.

UEA report especially relevant given CAP outcomes

The UEA study comes a week after EU legislators agreed to a broad series of CAP reform measures, following the conclusion of intense trilogue negotiations in Brussels. The established measures, which have been the subject of much controversy since they were first outlined in late 2010, remain just as divisive today.

Farming organisations have criticised measures which they believe will affect production and penalise larger farms, without providing any reprieve for the environment. Green groups maintain that greening and levelling measures introduced in the reforms have been weakened by industry interests to the point of irrelevance.

Although a Defra spokesperson pointed to the government's intention to use modulation (the ability to shift 15 percent of the CAP fund between the direct payment and rural development pots) as a means of boosting funding for schemes that deliver for the environment, green groups and farm unions have pointed out that many EU states will transfer funds in the opposite direction.

European Greens agriculture spokesperson José Bové MEP railed against the outcome of negotiations last week, stating that MEPs had "more or less allowed a re-nationalization of the CAP." He continued, "Member States won against the communitarian ideal of solidarity and equality: it is the politics of everyone for themselves wins."

Writer and campaigner George Monbiot also criticised the dilution of meaningful CAP reforms last week. He called the subsidy regime "the most blatant transfer of money from the poor to the rich that has occurred in the era of universal suffrage."

Key findings from Bateman's report:

•  Land use policy based on market prices alone results in decisions which lower overall values at national scale.
•  Potential improvements in land use planning would generate social gains sufficient to more than compensate for any associated losses.
•  Substantial improvements could be achieved through relatively modest changes in land use.
•  Targeted measures would greatly help conserve wild species, while only marginally reducing market profitability.
•  Converting comparatively small amounts of farm land into open access recreation space will yield a modest loss in farm produce value while generating a far greater value from increased recreation, with greatest benefits close to urban areas.