In a context of reflections around the next Common Agricultural Policy (CAP) reform, the European Commission is considering the possibility to decentralize the provision of environmental goods towards lower level of governments. We examine the gains of such potential policy using a simple model of an economy constituted of homogeneous regions and considering that agriculture produces jointly local and global PGs (public goods). We assume that the central government faces lower deadweight losses than the local government but that the local government can better target their subsidies. Our analytical results present the differences of landscape structure (constituted of two areas) and welfare in three cases of governance: full-centralization (EU is in charge of environmental good provision), full-decentralization (local government is in charge of environmental good provision) and partial decentralization (EU allocates a share of its budget to the local government for the provision of environmental goods). We apply our theoretical model to the case of abandoned wetlands in Brittany. Based on this example and the actual CAP budget dedicated for environmental good provision, we illustrate the difference of welfare between the three cases of governance.
Acknowledgement : The authors acknolewdge funding from the project: PROVIDE, PROVIding smart DElivery of public goods by EU agriculture and forestry; H2020 programme of the European Commission, grant number 633838. This work does not necessarily reflect the view of the European Union and in no way anticipates the Commission s future policy in this area
