Agricultural support policy in Canada: What are the environmental consequences?

Abstract

This paper reviews annual government spending on Canadian agriculture that attempts to stabilize and enhance farm incomes. Over the past 5 years, 2/3 of the $3 billion spent on agriculture went into stabilization programs to support farm incomes. However, this level of support raises questions about the environmental consequences of enhanced agricultural production. Environmental impacts from agriculture are well known and addressed in US and EU policies. In contrast, Canadian government expenditures on environmental initiatives in agriculture, as a share of farm income, are more than 10 times smaller than those in the US and the EU. Nonetheless the evidence is that Canadian programs have modest impacts on production, but that chemical and fertilizer input use may be higher than in the absence of the program. One possible course of action is to introduce cross-compliance between program payments and environmental objectives. However, there are no requirements that Canadian producers receiving support comply with environmental standards. While cross-compliance could be considered in the Canadian context, policies that directly target specific environmental issues in agriculture may have greater impact.