Future of the EU will be shaped by global forces
The future of Europe’s rural areas is for an important extent shaped by more or less autonomous global driving forces. Especially the development of (global) demography and macro economic growth outline the trends for rural Europe. These driving forces set the demand for food and fuel and will shape the opportunities and threats of EU regions. EU policies can smoothen or speed up these global trends. Especially for issues such as farm income, farm structure and agricultural abandonment EU policies on CAP and bio-energy make a difference.

Changing role of farming
The total agricultural production in the EU remains more or less intact in all scenarios. The importance of farming for the total economy is already small in the EU15 (old member states). In the EU12 (new member states) the significance for the economy will decline rapidly over time for all scenarios towards the level of the EU15, leading to a significant decrease in agricultural employment. Farming remains above all important for the use and management of the land and the environment.

Agricultural abandonment depends on liberalization and bio-energy
In all scenarios but the Continental Market scenario the EU27 faces significant land abandonment by agriculture. Especially the liberalization scenarios Global Economy and Global Co-operation show large scale abandonment (10-12% of total agricultural area until 2030) .This is a continuation of trends in the past. Especially the marginal areas in the EU15 will be affected. Although policies do not turn the historic trend completely, more support of the CAP and stimulation of bio-energy crops will reduce the amount of abandoned land by more then 50%.

EU12 catches up, but remains behind
Structural changes in the EU12 are larger than in the old member states. Because of that the EU12 catches up with the EU15, although it remains behind for farm income and GDP per capita. In this process of change a large amount of agricultural labour will be freed. The question is whether the rest of the economy in the EU12 can absorb all this surplus labour? When looking at the overall growth of the EU12 economies this will probably not be the case for the majority of regions in the EU12.

Livestock shift is needed to meet environmental targets
In Europe a number of hotspot regions of livestock production are present. These hotspots are an environmental risk, where strict implementation of environmental policies on for instance nitrogen and water quality is needed to prevent (or stop) pollution of air, soil and water. Concentration of livestock in certain regions can be however logic from an economic point of view, since it facilitates an efficient supply chain. There are also regions with very low livestock rates. In these regions livestock might enhance farmers income. In regions with a high production of arable crops additional livestock might create opportunities for a more closed nutrient cycling.

Large impact of bio-energy policy
The EU-biofuel directive will not be met in all 4 scenarios without additional policies. Substantial subsidies are necessary to reach the 5.75% fuel consumption target in 2010. The impact of such a policy to reach 5.75% will be large. Due to this policy the aggregate income from farmers agricultural employment and the contribution of agriculture to GDP will increase slightly. Most important aspect is the impact on the production of biofuels and land-use. For the EU27 about 4% of total land and about 8% of agricultural land will be used to grow first generation bio-energy crops. Erosion, carbon sequestration and biodiversity will be negatively influenced by the increased demand for energy crops. The biofuel directive leads to a relatively large production growth in Brazil which induces higher farm incomes, higher land use and related negative implications for biodiversity.

Changes in CAP policies imply higher income and less production effects
The change in the CAP policy from market price support to income support leads to relatively minor changes in agricultural production, but to more profound changes in agricultural income, land prices and farm structure if CAP policies are abolished. Reduction of both income support and market support will cause a decline in agricultural income. The impact of income support on income is most substantial. In contrast to the EU15 the EU12 shows an increase of agricultural income due to production growth and the accession effect until 2010.

A positive future for EU27...
Farm income and the number of farmers will decline, but in general many indicators develop in a positive way for the EU27. Overall GDP is growing in all scenarios, agricultural production is maintained although on a smaller area of agricultural land. Also the target of replacing 5.75 percent of fossil fuel with bio-energy from crops can be reached and in most scenarios erosion decreases, biodiversity will grow and carbon sequestration goes up.

… but regional differences remain large
Unless these positive overall EU27 developments, many regions are still facing problems in the future. In general rural regions in the EU12 are still lagging behind on socio-economic aspects. The structural change of agricultural production will lead to a labour surplus that probably cannot be absorbed by the regions itself. In marginal regions of the EU15 land abandonment will occur on an extensive scale. As a consequence open farmland landscapes will disappear as well as accompanying specific habitats and valued landscapes. Although improvements are observed a large number of regions still lag behind concerning environmental issues as erosion, biodiversity loss and large nutrients surpluses.

Need for policy coherence on different scales
On at least three scale levels there is an important role for policy to enhance sustainable development of rural Europe. On the global level, climate change and trade liberalization ask for attention. On the EU27 and the national level, the future of sustainable agriculture in relations to land management and socio-economic aspects should be discussed in relation to the CAP reform. On the regional level the opportunities and threats coming from the higher scales should be addressed with a fit rural development strategy. A specific rural development strategy per region is needed to take into account the large differences between regions. Understanding the interaction of policy on different scales is essential for good governance.