Crop biodiversity repercussions of subsidized organic farming in Greece
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This paper analyzes the impact of CAP financial assistance on crop biodiversity under
uncertainty. A stochastic production function is employed and estimated to assess
whether risk-averse farmers hedge risk by diversifying their portfolio of crops, thus
increasing crop biodiversity. The model is applied to farm-level data of organic crop
farms in Greece. Organic farming financial assistance poses a double-edged sword: even
though it is considered agrobiodiversity enhancing as a cultivation method, subsidizing it
can become agrobiodiversity reducing, since farmers may select to cultivate only the
subsidized crops. The study shows that risk aversion leads to crop biodiversity
conservation. However, providing CAP financial assistance on certain crops appears to
decrease the relationship between revenue risk management and crop biodiversity,
indirectly resulting in crop biodiversity loss.