Targeting Monitoring Resources to Enhance the Effectiveness of the CAP

From its inception the operation of the CAP has required the compliance monitoring of farming activities and anticipated increases in the complexity of the monitoring tasks with the introduction of the SFP will stretch monitoring resources even further. We outline the scope for using targeting to enhance effectiveness of monitoring resources in dealing with non-compliant behaviour. Targeting resources can increase information on particular groups making identification of inappropriate behaviour easier. However, in reallocating monitoring resources towards the targeted sub-group, there is likely to be an associated reduction in resources allocated to monitoring non-targeted agents and therefore an increase in their incentive to cheat. To reduce this problem we suggest balancing the targeting-induced reduction in the probability of being caught cheating for non-targeted agents with an appropriate increase in the penalty for those agents if they are caught cheating. This increase in penalty results in an increased divergence between the outcomes from being caught or not caught cheating for non-targeted agents, which increases the overall perceived risk of the cheating option. And for risk-averse agents, this increase is a disincentive to cheating. On this basis we argue for greater use of target-based compliance monitoring as part of the revised and evolving CAP.