AUTHORS: David Baldock, Harriet Bradley, Axel Godfroy, and Melanie Muro
The Common Agricultural Policy (CAP) remains one of EU’s largest and most influential policy frameworks. As environmental, climate and biodiversity crises grow, this report explores how key CAP payments can better align with EU sustainability goals and support more resilient, sustainable farming.
This report assesses how four key CAP payment schemes – basic income support, coupled income support, investment aid, and payments for areas of natural constraint – can be realigned to better support key EU environmental goals, including climate mitigation, and more resilient and sustainable EU farming systems.
The current generation of CAP payments often fails to deliver strong environmental benefits or income support where it is most needed. Basic income support remains broadly distributed based on land area, disproportionately benefitting larger farms and doing little to target low-income or environmentally beneficial systems. Coupled income support remains heavily concentrated in livestock sectors, particularly cattle, with weak links to sustainability outcomes and, in some cases, unintended reinforcement of emissions-intensive practices.
Investment aid, while a potentially powerful tool for transformation, is largely skewed toward productivity-enhancing investments, with relatively little funding allocated to environmentally driven or significantly climate-positive transitions. Similarly, payments dedicated for farms in “areas with natural constraints” (a category covering over half of all EU farmed land) intended to support farming in disadvantaged areas – are widely dispersed, often without clear environmental or socio-economic targeting. In many cases, these schemes absorb substantial CAP resources without generating a commensurate return in public goods or long-term resilience.
Against this backdrop, the report explores two broad approaches to reform:
- Remove and reinvest
- Gradually phase out untargeted or environmentally counterproductive payments.
- Reallocate funding to better targeted alternatives such as agri-environment schemes with clear sustainability outcomes, including result-based payments and targeted income support for vulnerable farms.
- Redesign
Options depend on the current scheme design and related conditions but include:
- Introduction of stronger environmental criteria and targeting within existing schemes and more focused forms of conditionality.
- Restriction of eligibility to more precisely selected farms or regions, reflecting demonstrable need or clear potential for enhancing sustainability and environmental benefit.
In addition, national and regional administrations in the Member States can use the discretion available to them under present and likely future CAP rules to shift budgets toward better-performing support policies.
Both approaches emphasise the importance of improving scheme design, while at the same time investing in the necessary administrative capacity, and accessible and supportive advisory services. They also recognise the need to balance ambition with practical delivery – and to take account of the particular needs of different areas in Europe, including those with limited administrative resources or farming systems under particular economic pressure.
While major structural reform will require changes at the EU level, Member States already have room to act. Modifications to national CAP Strategic Plans before 2027 offer immediate opportunities to pilot or scale more targeted approaches. At the same time, national authorities are in a critical position to shape the direction of the next CAP by engaging in the early design of future schemes and funding models.
With the next CAP reform already on the horizon, this report is a timely call to rethink how public funds are used in agriculture. It offers a foundation for such efforts. It aims to support policymakers and agricultural administrations in considering some of the key objectives that policy will need to help deliver, identifying viable realignment strategies, anticipating implementation challenges, and building consensus for a more strategic and sustainability-oriented CAP.
