As a result of agricultural, land and ownership reforms coupled with liberal agricultural policy during the transition, agricultural land use in Estonia became more fragmented. A significant portion of agricultural land users are now considered passive farmers who maintain their agricultural land (often permanent grasslands) in good agricultural and environmental conditions and are therefore eligible for single area and greening payment. The maintenance of permanent grassland is one of the objectives of the EU Common Agricultural Policy (CAP), which contributes to the overall climate and biodiversity objectives of the EU. Until 2014, in Estonia, the minimum eligible activity for the maintenance of permanent grassland was to cut the grass and leave it on the ground. In 2015 and 2016, the area on which the cut grass could be left on the ground was restricted in order to increase incentives for more active agricultural land use. This paper analyses the likely effects of such restriction on the use and maintenance of permanent grasslands. The results of the study show that in the case of restrictions on the eligible practices of permanent grassland maintenance, passive land users as well as crop and mixed crop-livestock farms are likely to reduce the area of permanent grasslands (shrinking farms). At the same time, grazing livestock farms (expanding farms) would be willing to expand their permanent grassland area. More than 70% of the permanent grasslands of shrinking farms are located within 1 km and more than 90% within 2 km of expanding farms. However, in some regions it is likely that the maintenance of permanent grasslands is stopped as a result of the restrictions. It is argued that if permanent grasslands are to be maintained, it is necessary to introduce supports for grazing livestock farms, targeted supports for passive land users for their maintenance or more comprehensive land use policy that takes the climate change mitigation requirements into account.
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