Simulating farm level response to crop diversification policy

• A new approach was developed to perform ex-ante impact analyses of crop diversification behaviour.
• Four policy proposals were modelled.
• The measure lends itself for targeting at farm and crop level.
• In Flanders small farms play a significant role in the diversification effect.

One of the new political instruments of the upcoming European Common Agricultural Policy-reform is the crop diversification measure. To comply with this measure, arable farmers will have to grow a minimum number of crops on their land, in given proportions. In this paper a non-parametric simulation model is developed to predict land cover changes while tackling the self-selection problem. Farmers’ behaviour is based on their closest peer‘s behaviour. A comparison between the results on diversity, measured through the Shannon Diversity Index, and the policy impact on farms, shows a clear trade-of and a potential for targeting.