EUROPEAN COMMISSION Brussels, 29.3.2017 SWD(2017) 121 final COMMISSION STAFF WORKING DOCUMENT Accompanying the document REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the implementation of the ecological focus area obligation under the direct payment scheme {COM(2017) 152 final}



Contents LIST OF ACRONYMS LIST OF FIGURES LIST OF TABLES 1. INTRODUCTION 1.1. Commission EFA report of March 2017: mandate, purpose and scope 1.2. Past and future initiatives relating to greening 2. KEY TRENDS IN ENVIRONMENTAL INDICATORS 3. EFA OBLIGATION — OBJECTIVES, KEY PROVISIONS AND RELATIONSHIP WITH OTHER CAP INSTRUMENTS 3.1. Key elements and objectives of greening, including EFA 3.2. Legal basis 3.3. Obligations for farmers 3.4. Calculation of the EFA area for the purpose of meeting the 5 % requirement 3.5. Changes to farmers’ obligations resulting from the 2016 review 3.6. Exemptions from the EFA obligation 3.7. Relationships between EFA and the rest of the CAP 3.8. Additional approaches 3.9. Alternatives to EFA obligation

3.10. IACS and greening: control requirements and the penalties system 3.11. Notifications by Member States 4. METHODOLOGY, DATA SOURCES AND LIMITATIONS 4.1. Approach to assessment 4.2. Analysis of Member State decisions and implementation data 4.3. Data on the uptake of greening and EFA obligation 4.4. Context data 4.5. Classification of NUTS 3 regions based on EFA implementation data 4.6. Simulations of potential impact of EFA 4.6.1. EFA calculator - introduction 4.6.2. Structure and foundation of the EFA calculator 4.6.3. Impact scores 4.6.4. The aggregation process 4.6.5. Use of the EFA calculator with NUTS 3 regions 4.6.6. Warnings and limits in the use of the calculator 4.7. Study requested by the Commission 4.8. Other relevant scientific literature LIST OF ACRONYMS

AEC Agri-environment-climate BS Buffer strips CAP Common agricultural policy CF Conversion factor CC Catch crops and green cover SWD Commission staff working document EFA Ecological focus area(s) EUNIS European nature information system FSS Eurostat Farm Structure Survey GAEC Good agricultural and environmental conditions (of land) HNV High nature value IACS Integrated administration and control system JRC Joint Research Centre LF Landscape features LLF Land lying fallow LPIS Land Parcel Identification System MS Member State NFC Nitrogen-fixing crops PPP Plant protection products RDP Rural Development Programme

SMR Statutory management requirement WF Weighting factor



LIST OF FIGURES Figure 1 Visual representation of the nine categories Figure 2 Broad impact matrix between EFA types and biodiversity EUNIS groups Figure 3 Broad impact matrix between EFA types and ecosystem services Figure 4 Impact matrix for fallow land on amphibians LIST OF TABLES Table 1 Productive and non-productive EFA types Table 2 Exemptions from the EFA rules Table 3 Links between EFA and cross-compliance mechanism Table 4 Summary of EFA types and attached requirements Table 5 Member States’ notifications on greening choices relating to EFA Table 6 Availability of notifications related to EFA submitted by Member States Table 7 Classification criteria of NUTS 3 regions



1.INTRODUCTION Implementation of the reformed common agricultural policy (CAP) began in 2015 and covers the period up to 2020. The reformed CAP has a new policy instrument under its overarching objective of ensuring sustainable management of natural resources and climate action. This instrument, the green direct payment incorporated under the CAP’s first pillar, introduces specific measures that contribute to addressing concerns over biodiversity loss, soil and water quality and climate change. This Commission staff working document (SWD) provides an analytical background to the progress achieved in implementing one of the greening obligations presented in the Commission Report, namely the ecological focus area (EFA) obligation. The first chapter of this document explains the mandate, purpose and scope of the initiative, and how it links with past and future initiatives concerning greening. Chapter 2 describes contextual data on the main environmental trends linked to agricultural areas and influenced by agriculture. Chapter 3 explains the purpose of the EFA obligation and details its components. Chapter 4 explains the methodology and outlines the main limitations of the analysis. Chapter 5 analyses national quantitative data on the uptake of EFA. Chapter 6 provides first insights into the likely environmental impacts of the EFA instrument. Chapter 7 lists the bibliographic references. 1.1.Commission EFA report of March 2017: mandate, purpose and scope The Commission’s obligation to present by 31 March 2017 an evaluation report on the implementation of the EFA obligation, accompanied where appropriate by a legislative proposal to increase the EFA percentage from 5 % to 7 %, is laid down in Article 46(1) of Regulation (EU) No 1307/2013 on direct payments (‘the Basic Regulation’). Based on this mandate, the Commission Report examines the progress on implementing the EFA obligation. The report: looks into the EFA implementation options selected by Member States; examines the uptake of EFA elements by farmers; explores the potential environmental and climate-related impacts of the EFA obligation in the light of available scientific information on the effectiveness of features and elements that qualify as fulfilling an EFA obligation. Where relevant, the report also uses information from a dedicated public consultation on greening that the Commission ran in 2015 and 2016. The report does not constitute an evaluation under the Commission’s standards as set out in the Commission's Better Regulation Guidelines of 19 May 2015. Furthermore, it examines only the potential environmental effects of the EFA obligation as is it as yet too early to collect and study evidence of its actual impacts. The evaluation of the real impacts will require also qualitative field data in the future analysis. 1.2.Past and future initiatives relating to greening Greening review after one year and ensuing legislative amendments The report builds upon the results of the work done in 2016 as part of the review of greening after one year of application. When the CAP reform was adopted, the Commission committed itself to: reviewing the EFA obligation in the light of the experience gained after the first year of its application; looking into the administrative burden arising from the new rules; the impact on the level playing field for farmers coming from differences in implementation by Member States; and the impact on production potential. The review, conducted as part of simplifying the CAP and of the Commission’s 2016 REFIT programme, took a broader view on greening. The review was finalised in 2016 with the publication of the Commission staff working document of 22 June 2016 assessing how the system had been applied in the first year, identifying certain weaknesses that prevent full exploitation of its potential, and considering possible ways forward to remedy them. Following up on the review, the Commission put forward a number of changes to certain parts of the greening legislation, focusing mostly on EFAs. The changes are meant for application as of the 2018 claim year, but Member States may implement them already in the 2017 claim year. As of March 2017 these changes have not yet entered into force. Evaluation of all greening measures A more in-depth assessment of EFAs’ environmental performance and of the whole greening obligation will be included in the evaluation scheduled for completion by the end of 2017 or early 2018. The evaluation will be conducted on the basis of the five evaluation criteria as defined in the Commission Better Regulation Guidelines: effectiveness, efficiency, coherence, relevance and EU added value. The evaluation should also provide timely results for the performance report due in 2018 on the CAP monitoring and evaluation.

2.KEY TRENDS IN ENVIRONMENTAL INDICATORS Many valuable habitats and the biodiversity they encourage are developed with and rely on farming systems. However, the efforts involved in safeguarding this biodiversity are not recognised by markets and therefore not reflected in the prices farmers receive for their produce. While the preservation of this biodiversity depends on appropriate management practices, these practices — driven by competitive pressures — have been subject to change, with increasing specialisation and intensification of production in some areas and land abandonment in others, These have resulted in pressures on biodiversity, detrimental effects on soil, water and climate, and put the agricultural sector’s long-term production potential at risk. To monitor the impact of CAP policy between 2014 and 2020, 45 socioeconomic, sectoral and environmental indicators were selected, tracking among others the developments described above. The trends most relevant for environmental focus areas are described below, supplemented by information from other relevant sources. However, their evolution depends on the combined effect of various policy instruments, both within CAP and beyond. Furthermore, in many cases, EU aggregations mask regional and national differences. The information below should be read in this context. The most commonly used barometer of the general state of biodiversity in agricultural areas is the farmland bird indicator (FBI). The indicator keeps track of the populations of selected bird species characteristic of farmland and is used as a barometer of the biodiversity change in agricultural land. Bird populations are considered to be a good indicator of the broad state of wildlife and the countryside because they occupy a wide range of habitats and tend to be near to or at the top of the food chain. Since 1990, farmland bird populations in the EU have decreased by nearly 30 %. While populations of common bird species have started stabilising since 2010, farmland birds have continued declining, albeit at lower rate. The trend shows that bird species that depend on the farmland habitat as created by human activity are increasingly threatened by new agricultural practices. Among them are changes in land use (crop rotation patterns, disappearance of uncultivated verges, disappearance of hedgerows) and the increasing land take (asphalted areas). The distribution and share in agricultural areas of land uses and farming systems considered supportive for farmland biodiversity is reflected in the high nature value (HNV) farming indicator. While there is no common methodology for identifying HNV in different territories, such territories are most commonly characterised by low-intensity management practices, a significant presence of semi-natural vegetation, and/or diversity of land cover, including features such as ponds, hedges and woodland. The share of HNV in agricultural area varies considerably among Member States, ranging from more than 60 % in some to less than 20 % in others. Typical HNV farmland areas are extensively grazed uplands, alpine meadows and pasture, steppe areas in eastern and southern Europe, and dehesas and montados in Spain and Portugal. Certain more intensively farmed areas in lowland western Europe can also host concentrations of species of particular conservation interest. However, the HNV indicator does not reflect the current situation of biodiversity in the field. The information reported under the Habitats and Birds Directives shows no measurable improvement in the status of species and habitats associated with agriculture between the reporting periods 2001-2006 and 2007-2012: for habitats (Annex 1 to the Habitats Directive), 4 % of the assessments showed an improvement between the two periods while 39 % of the assessments showed deterioration. For species the corresponding figures were 4 % and 20 % respectively. The habitats linked to agriculture (grassland and cropland) have the lowest share of favourable assessments among terrestrial habitats. The main impacts of agriculture on water are linked to losses of nutrients such as nitrates and phosphates from agricultural soils into freshwaters. Applied in excess, both nitrates and phosphates play a significant role in triggering eutrophication processes. Potential risks in this regard are measured by the gross nutrient balance indicators. According to latest data, which covers the period from 2008 to 2011, for the EU-28 the average balance between the nitrogen added to an agricultural system and that removed from it was 47 kg per ha. However, this was almost 16 % lower than in the period 2000-2004. In addition, the figure was much lower in the EU-13 than in EU-15. Nevertheless, on average, the EU still has a significant surplus of nitrogen. However, actual risks depend on several factors such as intensity of agricultural activities at local level, climate conditions, soil characteristics and certain management practices. Nitrate concentrations in groundwater and surface waters are among the criteria for identifying waters polluted or at risk of pollution. As of 2012, most Member States showed a clear prevalence of surface waters with concentrations of nitrates below the drinking water threshold of 50 mg nitrate per litre. However, many still had water bodies with concentrations over the level at which eutrophication and other negative effects on aquatic ecosystems appear. As for ground waters, the share of water bodies exceeding the drinking water threshold was generally higher than for surface water in most of the countries, with around 85 % of monitoring sites in the EU showing concentration levels below 50 mg nitrate per litre. Soil erosion by water is one of the most widespread forms of soil degradation in Europe, with the average rate of loss amounting to 2.4 t/ha/year. In 2012 around 6.6 % of the EU total agricultural area was estimated to be suffering from moderate to severe erosion (>11 t/ha/year). Soil degradation by water erosion is particularly significant in some countries of southern Europe and in mountainous countries. Cultivated land (arable and permanent cropland) is estimated to be more affected than permanent grasslands and pasture. Soil erosion trends in EU showed a moderate decrease between 2000 and 2012 mainly due to the application of environmentally sustainable agricultural practices such as reduced tillage, plant residues, cover crops, stone walls, contouring and grass margins. It should, however, be noticed that the soil erosion indicator is based on a model which defines only the potential soil erodability without taking into account the actual soil erosion which can only be calibrated through in field observations.

3.EFA OBLIGATION — OBJECTIVES, KEY PROVISIONS AND RELATIONSHIP WITH OTHER CAP INSTRUMENTS 3.1. Key elements and objectives of greening, including EFA The aim of greening is to enhance the environmental performance of the CAP. The instrument makes a part of direct payments received by farmers conditional on their observance of three ‘greening’ practices beneficial for the environment and the climate. These practices are: dedicating 5 % of arable area as an ecological focus area (EFA); crop diversification; maintenance of permanent grassland. The overall objective comprises objectives of: carbon sequestration linked to the maintenance of permanent grassland; improvement of soil quality associated with crop diversification; safeguarding and improving biodiversity on farms associated with the establishment of EFAs. There are two types of expected effects of EFAs: (i) those affecting biodiversity directly; (ii) those affecting biodiversity indirectly, where the improvements are achieved by reducing the inputs on agricultural areas. The legislation underlying greening also refers to certain desired or unwanted effects on other environmental media (i.e. on water) that should be avoided.

The greening obligations aim to make farmers apply certain basic practices to ensure environmental/climate benefits, either by changing their practices (to achieve better environmental/climate outcomes) or by maintaining already applied practices (to maintain environmental/climate benefits). 3.2.Legal basis The basic rules of greening are set out in Regulation (EU) No 1307/2013 on direct payments (‘the Basic Regulation’). The Regulation: establishes the three standard greening obligations, including the establishment of an EFA and the elements comprising it (Article 46); lays down objectives linked to the obligations; defines basic concepts and terms. Article 43(12) and (13) of the Basic Regulation empowers the Commission to specify certain technical parameters and implementing arrangements via delegated and implementing acts. This has been done in Commission Delegated Regulation (EU) No 639/2014 (the ‘Delegated Regulation’) and Commission Implementing Regulation (EU) No 641/2014 (the ‘Implementing Regulation’). The administration, financing, management and control requirements are laid down in Regulation (EU) No 1306/2013, while Delegated Regulation (EU) No 640/2014 and Implementing Regulation (EU) No 809/2014 specify the rules on the integrated administration and control system (IACS). In addition, Commission services have drawn up technical guidance documents for Member State authorities, e.g. on the EFA layer and on the Land Parcel Identification System (LPIS). These guidance documents explain the relevant obligations and put them into context. 3.3. Obligations for farmers Article 46(1) of the Basic Regulation requires farmers with arable land exceeding 15 ha to ensure that at least 5 % of such areas is an ecological focus area. In Article 46(2) this Regulation defines what may be counted as an EFA area (the ‘EFA types’). Some of the EFAs (landscape features and strips of eligible hectares along forest edges) are further categorised in Article 45 of the Delegated Regulation. Various management, control and size-related requirements are also established for each EFA type (e.g. no production, limitation of agro-chemical inputs, maximum and/or minimum dimensions). One of the main categorisations of EFAs is into areas on which production is possible and areas or features where this is not possible or which by nature exclude production (See Table 1). Productive EFAs Non-productive EFAs Hectares of agro-forestry Strips along forest edges with production Short rotation coppice Catch crops/green cover Nitrogen-fixing crops Land lying fallow Terraces Landscape features (hedges/wooded strips, isolated trees, trees in line, trees in group/field copses, field margins, ponds, ditches, traditional stone walls, other landscape features undercross-compliance) Buffer strips Strips along forest edges without production On the basis of the common EFA list, Member States draw up a list of EFA types from which their farmers can choose. Member States may also change or add certain requirements for some EFA types. Under Article 45(3), (4) and (5) of the Delegated Regulation, terraces, landscape features and buffer strips which Member States protect under cross-compliance rules can also be selected. Except in a few cases, the legislation does not specify the criteria for these national choices. Table 4 at the end of the chapter summarises EFA types and attached management requirements. 3.4.Calculation of the EFA area for the purpose of meeting the 5 % requirement To calculate the EFA, the Basic Regulation established a system according to which each EFA type is assigned specific conversion and weighting factors. The values of these were subsequently established in Annex II to the Delegated Regulation (which amended Annex X to the Basic Regulation): Conversion factors simplify the measurement of some EFA types such as trees and ponds. Their use is optional for Member States. Differentiation of weighting factors reflects the fact that individual EFA types have different ‘characteristics’ and consequently a different impact on/importance for biodiversity in the light of EFA’s objective ‘to safeguard and improve biodiversity on farms’ (Recital 44 of the Basic Regulation). Accordingly, lower weighting factors

(below 1) are assigned to elements that are productive compared with elements that are not productive and whose function, in principle, is only environmental (max. 2) and whose existence is therefore not warranted from a farmer’s perspective. Weighting factors below 1 are mandatory.

3.5.Changes to farmers’ obligations resulting from the 2016 review Major changes pursued as a follow-up to the 2016 review of greening include: (i) a grouping of some EFA categories defined in the Delegated Regulation; and (ii) simplification and streamlining of dimension requirements. For the latter in particular, EFA elements that exceed the set dimensions or which are adjacent to a first EFA will no longer be excluded from being counted as EFAs. In addition, the changes include clarifying various requirements and concepts such as what is understood by ‘no production’ and how this restriction relates to rules under other CAP instruments and the extent of ‘adjacency’. Some changes also take better account of agronomic realities and seasonal weather conditions, by replacing deadlines with retention periods or changing the composition of certain crops required under an EFA. The changes aim at: reducing the uncertainty farmers encounter in applying different EFA types; decreasing the complexity of distinguishing EFA types; allowing farmers to count as EFAs environmentally valuable features that have so far been excluded. In addition, in order to increase the biodiversity benefits of EFAs, plant protection products are banned on (potentially) productive EFAs. 3.6.Exemptions from the EFA obligation Several categories of farmers are exempt from all greening rules. In addition, there are a number of exemptions specifically from the EFA obligation. These apply particularly to farmers with a large proportion of grassland but also to farmers in predominantly afforested areas in certain Member States. The exemptions are summarised in Table 2. Legal basis (the Basic Regulation) Who Scope Rationale/category Art 46(1) Farmers having less than 15 ha of arable land EFA Proportionality (cost /benefit) Art 61(3) Farmers participating in the small farmers scheme (SFS) All greening obligations Simplification Art 43(11) Farmers complying with organic farming rules All greening obligations Farmers considered ‘green by definition’ because their practices are considered to yield at least the same environmental benefit or cases where application of greening rules would run contrary to its objectives e.g. lead to land abandonment Art 43(10) Farmers whose holdings are fully or partly located in areas covered by the Birds and Habitats Directives or the Water Framework Directive Where the greening practices in the holding concerned are not compatible with the objectives of these Directives Art 46(4) Farmers managing a predominant share of their farm as grassland, fallow land or crops under water EFA Art 46(7) Farmers in areas with natural constraints in countries with a predominant forest area EFA 3.7.Relationships between EFA and the rest of the CAP The greening component of direct payments goes beyond the cross-compliance requirements in place since 2005. The cross-compliance mechanism links CAP payments to farmers’ observance of a set of statutory management requirements (SMRs) based on EU environment legislation in areas such as biodiversity and water and several standards for the good agricultural and environmental condition of land (GAEC), which are defined by Member States: Member States may allow their farmers to count as EFA types the following features which require establishing or protecting under the cross-compliance rules: buffer strips along water courses (SMR 1, GAEC 1), terraces (GAEC 7), landscape features (SMR 2, SMR 3, GAEC 7).

In implementation of SMR 1, certain Member States require farmers to establish catch crops to take up residual nitrogen and so as to avoid bare soil and diffuse pollution in groundwater. Member States may also allow their farmers to qualify these areas with catch crops/green cover as EFA. EFA Buffer strips Landscape features Biodiversity Landscape features and terraces Landscape, minimum level of maintenance Source: DG AGRI, based on Annex II to Regulation (EU) No 1306/2013 For some of the areas or features mentioned above, farmers have to observe additional requirements to qualify these areas or features as an EFA, motivated by the biodiversity objective of the EFA obligation. For example, they are not allowed to have production on buffer strips or they must sow a mixture of species when sowing catch crops. Together with cross-compliance, greening represents part of the ‘baseline’ or ‘reference level’ for voluntary agri-environment-climate (AEC) measures financed under Rural Development Programmes (RDPs). To avoid the risk of double funding (between AEC payments and green direct payments), financial support for such voluntary measures cannot compensate practices equal or similar to greening requirements. Instead, payments for these AEC measures are calculated on the basis of income foregone and costs incurred for practices going beyond the ‘baseline’. It is the responsibility of Member States to ensure that there is no duplication of funding.

3.8.Additional approaches Based on Article 46(5) and (6) of the Basic Regulation, Member States may decide to implement the EFA requirement regionally or collectively in order to concentrate EFA areas within a particular territory. Under this approach, farmers are required (‘regional implementation’, Article 46(5), or allowed (‘collective implementation’, Article 46(6)) to organise themselves in such a way that they attain half of their EFA percentage requirements through adjacent EFAs, when these are located on the land of only some of the farmers involved, as this is considered more beneficial for the environment. The Delegated Regulation specifies rules and criteria to be met in this respect (Articles 46 and 47). 3.9.Alternatives to EFA obligation According to Article 43(3) of the Basic Regulation, Member States may allow farmers to meet one or more greening requirements through equivalent (alternative) practices.

The concept was introduced to accommodate the diversity of agricultural systems and the different environmental situations across Europe. The equivalent practices must be carried out either under AEC schemes within Member State RDPs, or in accordance with national or regional certification schemes. They must also yield an equivalent or higher level of benefit for the climate and the environment compared to one or more of the greening requirements. An exhaustive list of practices equivalent to ‘standard’ EFAs is provided in Annex IX to the Basic Regulation, together with certain management requirements. This covers: ecological set-aside; creation of ‘buffer zones’; management of uncultivated buffer strips and field margins; borders, in-field strips and patches; management of specified landscape features; keeping arable peaty or wet soils under grass (no use of fertilisers and no use of plant protection products); production on arable land with no use of fertiliser and/or plant protection products, and not irrigated, not sown with the same crop 2 years in a row; conversion of arable land into permanent grassland. According to Article 43(8) of the Basic Regulation, it is for the Commission to decide whether a practice notified by a Member State can be recognised as being covered by Annex IX. Article 10 of the Implementing Regulation establishes the procedure for assessing these notifications and the applicable deadlines. 3.10.IACS and greening: control requirements and the penalties system Like other direct payment schemes, the green direct payment is managed through the integrated administration and control system (IACS). A common set of IACS rules applies to all direct payments. These rules are designed to ensure that EU taxpayers’ money is correctly spent. However, a number of specific requirements apply to the green direct payment. Article 70(2) of Regulation (EU) No 1306/2013 requires Member States to ensure by claim year 2018 at the latest that the LPIS contains the ‘EFA layer’, a reference layer that includes EFAs. Information from the EFA layer is then used: (i) to help beneficiaries correctly declare their EFAs (the administration gives information on EFAs in the pre-established form that is provided to beneficiaries); and (ii) for cross-checking the EFAs declared by the farmer against the information in the EFA layer. Farmers who fail to comply with the greening rules do not receive the full greening payment. Delegated Regulation (EU) No 640/2014 specifies the applicable rules on reductions and penalties. Reductions reflect the number of hectares identified as non-compliant with the greening obligations; as of 2017, administrative penalties apply as well, as provided for in the third subparagraph of Article 77(6) of Regulation (EU) No 1306/2013.

In line with the proportionality principle, the amount of the penalty depends on: (i) the severity and scope of non-compliance; (ii) whether it has a lasting impact; and (iii) whether it recurs. Details of reductions and administrative penalties are laid down in Articles 24 to 29

of Delegated Regulation (EU) No 640/2014. In order to identify areas that are not compliant with the rules, Member States have to carry out inspections in line with the principles and rules set out in the IACS legislation. Article 31 of Regulation (EU) No 809/2014 is of particular importance for on-the-spot-checks on greening. It requires, as a rule, on-the-spot checks for: 5 % of all beneficiaries required to observe greening (supplemented by 5 % of all beneficiaries who are required to have EFAs if the Member State concerned does not yet have an EFA layer in place); 3 % of beneficiaries who are exempted from complying with the greening obligations.

Several other provisions in that Regulation are also relevant for greening. One such provision is Article 26(4), which stipulates that additional visits may be required for certain EFA types, where it is possible to check certain eligibility criteria only during a specific time period. EFA type Cross-compliance Dimensions Art. 45 (non-cross-compliance) Key requirements / management conditions set in Art. 45 Obligations / option for Member State to specify or change management conditions CF (m/tree to m2) WF Changes following the 2016 review Minimum limit Maximum limit Land lying fallow No agricultural production n.a. 1 Ban on the use of PPPs 6 month min. retention period specified ‘No production’ specified, sowing of mixtures of flower seeds allowed Terraces GAEC 7 MS shall set min. height 2 1 Landscape features Hedges/wooded strips GAEC 7 SMR 2 & 3 10 m (width) Features adjacent to arable land also eligible 5 2 Under one category with trees in line — see below Isolated trees GAEC 7 SMR 2 & 3 4 m (diameter); MS may include valuable trees < 4 m diameter Features adjacent to arable land also eligible 20 1.5 Rule on minimum diameter removed Features adjacent to the adjacent EFAs also eligible Trees in line GAEC 7 SMR 2 & 3 4 m (diameter); MS may include valuable trees < 4 m diameter 5 m (space between crowns) Features adjacent to arable land also eligible 5 2 One category with hedges / wooded strips. Area calculated to a maximum width of 10 m Rules on min. diameter and maximum space between crowns removed Features adjacent to the adjacent EFAs also eligible Group of trees/field copses GAEC 7 SMR 2 & 3 0.3h a Features adjacent to arable land also eligible n.a. 1.5 One category including field copses, trees, bushes or stones Area calculated to a maximum 0.3 ha Features adjacent to the adjacent EFAs also eligible Field margins GAEC 7 SMR 2 & 3 1 m 20 m; MS may decide on a lower max. limit No agricultural production Features adjacent to arable land also eligible 6 1.5 Under one category with buffer strips — see below Ponds GAEC 7 SMR 2 & 3 MS may set up min. area 0.1h a; MS may allow inclusion of riparian vegetation of max 10 m in pond area Concrete/plastic reservoirs excluded Features adjacent to arable land also eligible MS may establish criteria to ensure ponds’ natural value n.a. 1.5 Area calculated to a maximum 0.3 ha Riparian vegetation always included in the calculation of the area Features adjacent to the adjacent EFAs also eligible Ditches GAEC 7 SMR 2 & 3 6 m Concrete channels excluded Features adjacent to arable land also eligible 3 2 Features adjacent to the adjacent EFAs also eligible Traditional stone walls GAEC 7 SMR 2 & 3 MS may decide min. height and width MS may decide min. height and width Features adjacent to arable land also eligible 1 1 Features adjacent to the adjacent EFAs also eligible Other landscape features under cross-compliance GAEC 7 SMR 2 & 3 Features adjacent to arable land also eligible n.a. 1 Features adjacent to the adjacent EFAs also eligible Buffer strips GAEC 1 SMR 1 & 10 MS to decide min. width provided not < 1 m Max 10 m strip of riparian vegetation (included in buffer strip) No agricultural production Features adjacent to arable land also eligible MS may allow cutting and grazing provided buffer strips are distinguishable 6 1.5 Under one category with field margins — see below ‘No production’ specified, sowing of mixtures of flower seeds allowed Area calculated to a maximum width of 20 m MS to establish min. width not lower than 1 m Features adjacent to the adjacent EFAs also eligible Hectares of agro-forestry n.a. 1 Strips along forest edges without production MS to decide min. width provided not < 1 m 10 m No agricultural production MS may allow cutting and grazing provided strips are distinguishable 6 1.5 ‘No production’ specified, sowing of mixtures of flower seeds allowed Area calculated to a maximum width of 20 m Strips along forest edges with production MS to decide min. width provided not < 1 m 10 m 6 0.3 Ban on the use of PPPs Area calculated to a maximum width of 10 m Short rotation coppice No use of mineral fertiliser (MF) and/or plant protection products (PPPs) MS shall establish list of species most suitable from ecological perspective (excluding clearly non-indigenous) MS shall establish requirements on MF and PPP n.a. 0.3 Afforested areas n.a. 1 Catch crops/green cover SMR 1 Sown at latest 1 October Only mixture of crops or under sowing grass Areas under winter crops excluded MS to establish start & end date of sowing MS to establish list of crops MS may establish additional conditions, esp. production methods n.a. 0.3 Deadline for sowing of catch crops/green cover replaced by min. retention period of 8 weeks to be set by MS Undersowing by leguminous made possible Ban on the use of PPP; for undersowing applicable from harvesting of main crop for at least 8 weeks or until sowing of next main crop Nitrogen-fixing crops (NFC) Crops contributing to biodiversity objectives Mixtures with crops other than NFC not possible MS shall establish a list of crops (biodiversity contribution) MS shall establish rules on where NFC grown (risk of nitrate leaching) MS may establish additional conditions, esp. production methods n.a 0.7 Ban on the use of PPP Mixtures with crops other than NFC possible provided NFC remain predominant Obligation for MS to set rules on location of NFC replaced by specification that the risk of leaching be taken into account within possible additional conditions 3.11.Notifications by Member States The legislation specifies the schedule for Member States to notify the Commission of their implementation choices and information on the uptake of greening. This is summarised in Table 5. Greening obligation Type Deadline Legal reference Content Equivalence (incl. EFA) Decision on implementation 1 August 2014 1 July following years Basic Regulation Article 43(8) Implementing Regulation Article 10 Use of equivalent practices (optional) EFA Decision on implementation 1 August 2014 (annual review possible) Basic Regulation Article 46(8) Delegated Regulation Article 65(2) Activation of EFA types Activation of conversion and weighting factors Delegated Regulation Article 65(3) Regional and collective implementation Delegated Regulation Article 65(4) Forest exemption All Monitoring output indicators 15 December each year Delegated Regulation Article 65(1)(c) Implementation data for all greening obligations and exemptions 4.METHODOLOGY, DATA SOURCES AND LIMITATIONS 4.1. Approach to assessment The analysis covered by this document is mainly based on implementation information (information concerning Member State decisions and farmers' uptake of EFA), some statistical context information and a literature review. This analysis is based on both qualitative and quantitative evidence and covers two years of implementation of greening, namely 2015 and 2016. Implementation information is dealt with in the report based on: the notifications by Member States of their national choices on EFA elements and related requirements; the implementation data on the uptake by farmers of each greening measure compared against the statistical information on agricultural holdings in the EU (e.g. the Farm Structure Survey conducted by Eurostat). Information for 2015, the first year of implementation, was gathered and published for the first time in the SWD of 22 June 2016. This report provides updates using the latest 2015 figures and also the available data for 2016, explained more in detail in the next chapters. The quality of the Commission's assessment relies on the quality and timeliness of the Member States’ reports. While preparing this report, the Commission was in regular informal contact with the Member States’ authorities to ensure that reported data are as consistent as possible. There are, nevertheless, examples where reporting contains gaps or could contain contradictions. Analysis of the potential environmental impact of the EFA obligation in the scientific literature is still at an early stage. After two years of implementation just a few studies have been produced on the subject. This report contains first observations on the potential environmental impact based on: the analysis made by Commission’s Joint Research Centre (JRC) using a tool called the ‘EFA calculator’ (explained in detail in Chapter 4.6); information from other scientific and academic sources on the effectiveness of the different elements of EFAs, detailed in Chapter 4.8.

The limitations of the analysis, which is still preliminary, are highlighted in each of the following chapters. Where relevant, the assessment is supplemented by: other studies (see Chapter 4.7); input from stakeholders, including: oin the expert group and civil dialogue group formats; ofrom the stakeholder consultation on greening that the Commission conducted from mid-December 2015 until mid-February 2016. 4.2.Analysis of Member State decisions and implementation data This report is based on data notified by Member States for the years indicated in Table 6. Decisions on approaches to implementation apply in the claim year following the year of notification. For example, notification on an EFA sent by 1 August 2014 was applicable for claim year 2015. Content Year of notification Year of implementation Equivalence (including EFA) 2014 2015 2015 2016 2016 2017 EFA (Activation of EFA types — conversion and weighting factors — Regional and collective implementation — Forest exemption) 2014 2015 2015 2016 2016 2017 Implementation data for greening obligations and exemptions 2015 2016 To ensure comparability and consistency of the analysis, this report is primarily based on data for claim year 2015, for which the Commission has received most complete information. Where data already available for the claim year 2016 point to differences in Member States’ decisions and implementation data, these are also taken into account. 4.3. Data on the uptake of greening and EFA obligation Member States have to provide the Commission with data on the uptake of greening each year by 15 December (see Table 5). This data should be interpreted bearing in mind that greening is an obligatory scheme for all farms applying for direct payments in the period 2014-2020. Farms that have to meet greening obligations are therefore a subset of the farms under the direct payments scheme, the only difference between the two groups being farms exempted from greening (see Chapter 3.6). This document builds upon the data provided by Member States for the following: main indicators on the number of farmers and hectares subject to at least one greening obligation, reflecting the overall coverage of greening; a selection of specific indicators on farms subject to and exempted from the EFA obligation. The information was broken down geographically at NUTS 3 level (see below). Based on the structure set out in the legislation, the data, in excel format, was extracted by Member States’ authorities from their respective IACS, which stores all direct payments and rural development applications. The number of farmers means the number of beneficiaries of direct payments, including both exempted farms and those subject to greening obligations. In practical terms, the number of beneficiaries of direct payments (and greening) can be considered as equivalent to the number of holdings (farms) available in the Eurostat Farm Structure Survey.

The number of hectares, depending on the indicator in question, is calculated as the most relevant of the following: ototal agricultural area (farms with at least one greening obligation, those under the small farmers’ scheme and organic farms); oarable land; or othe EFA area. Member States should use the areas farmers declared in their applications, or the areas established following administrative and on-the-spot checks, where these figures are available at the time when the data are extracted from the database. The data used in this document are based on the figures available at the end of January 2017, which encompasses: all Member States except France for 2015; 19 Member States for 2016. Data for some Member States still require certain verification, especially for 2016. The figures for 2015 sent by Member States were verified and comments were sent to the countries where the data were found to be not consistent. Further updates on 2015 figures were received from six countries after the SWD on the review of greening after one year was completed. Possible caveats are indicated under each section of analysis. 4.4.Context data To calculate the relative proportion of farms subject to greening requirements in Chapter 5 on the state of play of implementation data, information is needed on the contexts in which greening is applied. The main types of context data that are useful when calculating greening indicators are: agricultural statistics: the greening data are analysed, taking the total number of farms and areas in the EU, the Member State or the region as the total population. The dataset used in this document is the Eurostat Farm Structure Survey (FSS) data for 2013. This is the most recent dataset available and is based on a survey, whereas the 2010 FSS data were taken from the agricultural census. Eurostat annual statistics have been used to analyse the trends of land lying fallow. The time series considered range from 2010 to 2015. Data for 2015 were not yet available when the SWD on the review of greening after one year was completed. direct payments data: in principle, greening is applied in all farms applying for direct payments, as it is an obligatory scheme under Regulation (EU) No 1307/2013.

The total number of farms applying for direct payments is therefore the most accurate measure of the population these data are drawn from. Farms that are exempted from greening obligations, such as farms operating under the small farmer scheme and organic farms, are also beneficiaries of direct payments. The data for 2015 were not yet available for all Member States when this document was drafted. Data on direct payments for 2014 could be used, but as the number of beneficiaries in the direct payments system has also changed starting from claim year 2015, it is not possible to use these data throughout. That is why Eurostat FSS data for 2013 are used to represent the population in most of the analysis. 4.5.Classification of NUTS 3 regions based on EFA implementation data Member States were asked to provide the monitoring data on the uptake of greening at

NUTS 3 level (regions): in 2015, all the countries except France provided such data. NUTS 3 regions with no or non-reliable data were excluded from the analysis. For example, data were excluded for France, for which information are still missing, Italy, where errors on EFA areas figures were detected, and for individual NUTS 3 regions in other Member States. All remaining 926 NUTS 3 regions were first automatically classified using a ‘k-means clustering algorithm’ on the distribution of the EFA types declared. This algorithm consists in partitioning observations into clusters in which each observation belongs to the cluster with the nearest mean, which then serves as a prototype of the cluster under analysis. Changing the number of clusters in the algorithm showed that using nine clusters was the optimal configuration (i.e. the optimal compromise between homogeneity within the clusters and heterogeneity between the clusters, while still keeping the number of clusters low). These nine clusters were distributed as: six clusters with high cumulated percentages of catch crops (CC), nitrogen-fixing crops (NFC) and land lying fallow (LLF); three clusters with high cumulated percentages of landscape features (LF) and buffer strips (BS). In NUTS 3 regions with a high proportion of landscape features, landscape features are essentially represented by hedges.

Based on this first exploratory analysis, the final nine categories were defined as rounded percentages of EFA types declared, as reported in Table 7 and Figure 1. Category First sub-division Second sub-division Composition of EFA types 1 LLF+CC+NFC < 80 % LF ≥ 50 % LLF+CC+NFC < 80 % - LF more than 50 % 2 LLF+CC+NFC < 80 % LF < 50 % BS < LF LLF+CC+NFC < 80 % - Relative abundance of LF 3 LLF+CC+NFC < 80 % LF < 50 % LF < BS LLF+CC+NFC < 80 % - Relative abundance of BS 4 LLF+CC+NFC ≥ 80 % LLF ≥ 70 % LLF+CC+NFC > 80 % - Prevalence of LLF 5 LLF+CC+NFC ≥ 80 % CC ≥ 70 % LLF+CC+NFC > 80 % - Prevalence of CC 6 LLF+CC+NFC ≥ 80 % NFC ≥ 70 % LLF+CC+NFC > 80 % - Prevalence of NFC 7 LLF+CC+NFC ≥ 80 % LLF < 30 % mix of CC and NFC LLF+CC+NFC > 80 % - Low LLF — Mix of CC and NFC 8 LLF+CC+NFC ≥ 80 % 30 % < LLF < 70 % NFC > CC LLF+CC+NFC > 80 % — Intermediate LLF — Relative abundance of NFC 9 LLF+CC+NFC ≥ 80 % 30 % < LLF < 70 % NFC < CC LLF+CC+NFC > 80 % — Intermediate LLF — Relative abundance of CC Figure 1 helps to visualise this methodology. The red lines in the left triangle show a NUTS 3 region with more than 80 % for the sum of fallow land, catch crops and nitrogen fixing crops and 50 % of LLF, 30 % of CC and 20 % of NFC. The NUTS region therefore falls in category 9 as the percentage of LLF is included between 30 and 70 % and CC is prevalent over NFC. 4.6.Simulations of potential impact of EFA 4.6.1.EFA calculator - introduction With the sparse and incomplete data availability, it is still very difficult to find and conduct very robust greening impact studies. The Commission's Joint Research Centre (JRC) recently asked for an EFA calculator to be developed. The calculator is a farm-level tool intended to raise farmers’ awareness of the implementation of EFA and provide guidance to them on EFA selection. The software estimates for a specific farm what that farm’s current level of performance is on biodiversity and ecosystem services, depending on its EFA share and composition. Considering that the data reported by Member States to DG AGRI on greening implementation are available mainly at regional level and not for individual farms, it was decided to run a study on the potential impact of EFA implementation in the EU. The supporting assumption was to divert the farm tool from its original aim and run it at NUTS 3 level by simulating the characteristics of EFA farms representative for each NUTS 3 region in question (producing an ‘average farm’), using data reported by Member States. By doing so, a rough estimate can be made of what the current possible impact of EFA is on biodiversity and ecosystem services in a specific NUTS 3 zone (through the ‘average representative farm’). The EFA calculator is based on a large and robust scientific review. However, underlying assumptions for its use at regional level obviously place some restraints on the actual quantitative results and further analyses are needed to actually test its robustness. Nevertheless, it provides a useful method to catch an early estimate of the potential impact of greening. 4.6.2.Structure and foundation of the EFA calculator The software, known as the ‘EFA calculator’, was developed by the University of Hertfordshire and is coordinated by the JRC. For a detailed description of the tool and its scientific basis, see the final report of the study on the EFA calculator (Tzilivakis, J., et al. 2015). The software estimates an individual farm’s current performance on biodiversity and ecosystem services depending on its EFA share and composition. This makes it possible for a user to test changes in the composition and quantity of the EFA on the farm and to simulate what the resulting impact could be. A literature review forms the foundation for the software tool. Over 350 papers, reports and guides were collated, reviewed and structured for the individual EFA types specified in the EFA legislation. The information from the literature review process was then converted into a form that could be used in the software. Ecosystem services and biodiversity were selected as a means of assessing the ecological benefit of EFAs. For biodiversity, this analysis is based on the diversity and populations of species. For the latter, there is specific focus on the EFA’s potential impact on enhancing populations. EUNIS species groups were used (EEA (2015b) (See Chapter 6.2.1).

The analysis concerning ecosystem services does not cover ecosystem disservices, where ecosystem functions are harmful to human well-being. However, it does cover negative impacts resulting from positive services (for example, creation of woodland may decrease water provision downstream in a catchment area). The Common International Classification of Ecosystem Services (CICES) system was followed (Haines-Young and Potschin, 2013) (See Chapter 6.2.1). 4.6.3.Impact scores A bespoke scoring system was developed based on the characteristics and potential impact of each EFA feature. The latter (known as the ‘feature impact’) was determined and is presented in Figures 2 and 3. Ticks in the matrix correspond to where evidence was found that the EFA feature has an impact (positive or negative) on the corresponding category of biodiversity groups or ecosystem services. Each EFA feature may impact one or more group of species (biodiversity) and/or one or more ecosystem service. These impacts depend on a set of parameters, each one consisting of several classes which reflect the impact score. For instance, to assess the potential impact of the EFA type fallow land on amphibians (Figure 4), the parameters used included: quality of adjacent water bodies (with classes such as no adjacency, good water quality, moderate water quality); ground cover (with classes such as bare soils, natural regeneration, sown bird seed mix). Relative impact scores were derived for each feature-impact combination (as described above). Each feature impact was scored on a scale of −100 to +100 for negative and positive impacts respectively. Two techniques were developed to score impacts: A semi-quantitative approach is used when the combinations of parameters are based on the quantified data. Scores were calculated for each of the possible combinations of relevant parameters then converted into a -100 to + 100 scale using a calibration table. This approach could only be applied to a few impacts (e.g. nitrate leaching and phosphate run-off, soil erosion). A qualitative approach, where scores are awarded for each class, then the scores for the classes selected are added together and weighted for each parameter. To make this approach less subjective, a protocol was used to derive scores and weights systematically, taking into account where possible existing scoring techniques, indicators or indices in specialist literature. This approach was applied to impacts where the semi-quantitative approach could not be used. On a scale of 100-0, the scores represent the potential impact that an EFA element can have on the ecosystem service or the biodiversity EUNIS species group. This ranges from the best impact (all parameters and classes fulfil the best condition) to no impact (the EFA elements do not fulfil any conditions for each parameter and related classes). Negative scores are calculated in the same way for negative impacts resulting from services. 4.6.4.The aggregation process Given the range of potential impacts on ecosystem services and biodiversity and the number of impact indices and data, some aggregation was required to facilitate simple assessment and interpretation. Positive and negative impact scores are averaged and aggregated separately. This is to avoid potential negative impacts becoming hidden by being ‘cancelled out’ by positive scores (and vice versa). The aggregation process potentially results in four values: positive and negative values for ecosystem services and positive and negative values for biodiversity. To make results comparable, these impact scores are also calculated per hectare. As described in the chapters that follow, the impact scores per hectare are the ones used in the analysis carried out in this study at NUTS 3 level. In this way comparison is possible as results are not influenced by farm size or by the size of the NUTS 3 regions.

In the EFA calculator, impacts are assessed not on the basis of a change from a baseline situation (baseline impact assessment) but on a functional basis (functional impact assessment). In a functional impact assessment, the assessment of performance would be concerned with the impact the EFA element (e.g. a hedge) has in terms of the functions and services it provides for both biodiversity and ecosystem services. This applies to both existing and new features (including features that may have been specifically created for EFA). Performance will not be based on changes to a baseline. 4.6.5.Use of the EFA calculator with NUTS 3 regions As already mentioned, to analyse and understand the potential impact on the environment of the EFA types declared by farmers in the EU, it was decided to use the EFA calculator at NUTS 3 level, where a region was considered as ‘one farm’ represented by the average farm as declared within the corresponding NUTS 3 region. Having made a rough estimate of the current possible impact of EFA on biodiversity and ecosystem services in a specific NUTS 3 zone through the average representative farm, it is then possible to make further analyses to estimate the potential impact of EFA in such region, depending on its general natural and semi-natural characteristics. To use the EFA calculator at NUTS 3 level, three types of data were introduced into the calculator: A.Characterisation of the NUTS 3 (whole farm parameters) For the analysis at NUTS 3 level, the parameters that could be used are those describing the NUTS 3 regions as a whole: dominant soil texture, mean slope, mean annual rainfall, mean annual precipitation, risk of acid deposition, risk of nitrogen deposition, ecological zones, mean annual temperature, mean hydraulic conductivity of the soil, erosion risk in catchment. Nevertheless, it was not possible to take into account in a regional context some specific attributes and practices linked to the EFA elements (such as floral diversity, landscape connectivity, hedge cutting season), which are relevant for assessing the impact on biodiversity and which can be used to fine-tune the EFA calculator scores. B.Average farm size The arable area of the ‘NUTS 3 farm’ was calculated as the average arable area of all farms implementing EFA in the specific NUTS 3 region. C.Area of EFA types The area of each EFA type for this ‘NUTS 3 farm’ was derived while maintaining the same proportion of the EFA types declared in the NUTS 3 region. For this, we used EFA implementation data 2015 notified by Member States to the European Commission at NUTS 3 level. The EFA calculator was run on 121 selected NUTS 3 regions, selected as follows: Exclusion of Member States and NUTS 3 regions whose data have not been notified to the Commission or contained inconsistencies when the study was carried out (Italy, France, UK (Scotland)); Among the remaining NUTS 3 regions it was decided that the sample should contain: NUTS 3 regions covering different percentages of EFA types declared; NUTS 3 regions in each ecological zone of the EU (temperate oceanic forest, temperate continental forest, temperate mountain, boreal coniferous forest, boreal mountain, sub-tropical dry forest, sub-tropical mountain, temperate steppe); NUTS 3 regions that present a potential risk for biodiversity and ecosystem services due to specialist cereals systems or a low level of semi-natural vegetation; neighbouring NUTS 3 regions (clustering) in order to check that the EFA calculator provides similar outputs for similar NUTS 3 regions (i.e. same type of farming systems, landscapes, climate conditions etc.). Among NUTS 3 regions selected there are regions with a high percentage of farms exempted from EFA (e.g. in Member States with an EFA forest exemption such as Sweden, Estonia, Latvia or with small farms like in southern Poland). Even if the percentage of the arable land affected by EFA in these regions is low, it was important to include them in the sample as the scores calculated by the tool are influenced by the region’s characteristics (soil, climatic data etc.). Excluding them would have made the sample less representative i.e. some ecological zones would have not been represented. Anyway, these regions will be excluded when analysing the results at territorial level due to the low potential effects that the EFA policy can have in areas with an insignificant number of farms implementing EFA. Based on this NUTS 3 approach, the analysis was carried out for the nine aggregated and detailed impact categories referred to in Chapter 4.5 (see table on classification criteria of NUTS 3 regions). 4.6.6.Warnings and limits in the use of the calculator The following assumptions and constraints should be kept in mind when analysing the results. The EFA calculator is a farm level-based tool which uses literature findings and evidence to build an impact matrix. The impact scoring system draws upon a broad variety of different measures and metrics then harmonises them using a common scoring scale (-100 to +100). This means that the results are not absolute in terms of numbers, but they depend on the circumstances of the farm described. This also means that the results do not indicate, especially for biodiversity, that any one EFA element is generically better than another EFA element — this will depend on the circumstances in which it is applied. When applying the EFA calculator at NUTS 3 level, it must be remembered that the parameters describing the geographical context are considered (even if as an average in the NUTS 3 region), whereas those related to management factors and local landscape conditions (e.g. floral diversity, landscape connectivity etc.) are not taken into account.