The may 1992 reform of the Common Agricultural Policy aimed to put an end to the imbalances in the commodity markets caused by high farm price supports. In addition, the reform explicitly recognised agriculture's role in the management of the environment. Economic analysis shows that agriculture's effects on the environment, whether positive or negative, are generally neither rewarded nor rated by the market at their true value ; from an economic viewpoint, they can therefore be considered as not produced at their optimum social value. For each given objective -market regulation, social equity or environmental protections- there is an appropriate type of instrument. Environmental services have to be rewarded at their true value, either directly by users when possible or indirectly by public subsidies associated with specific counterparts.
