• Sustainability in tourism: make or break

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    One of the consequences of the COVID-19 health crisis has been the increased awareness of the population and, by extension, that of politicians regarding the need to include sustainability criteria in economic policies in order to promote a more sustainable and resilient reactivation of the economy. The tourism industry is no stranger to these trends; firstly, because its business can be adversely affected by the consequences of climate change and, secondly, because there is ample scope for the industry to become more sustainable. This article attempts to determine what we understand by sustainability in the tourism sector, how it can be measured, the current situation of Spain’s tourism industry and where it is heading.

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    What do we mean when we talk about sustainability in tourism?

    Spain’s tourism industry has developed exceptionally in recent years, becoming one of the country’s main sources of business, income and employment. However, this strong development had also led to the emergence of some negative actions and social unease regarding the role played by tourism at certain destinations and moments until, in 2020, the coronavirus crisis paralysed the sector’s activity and highlighted its social and economic relevance for many areas in Spain. At present, the policies implemented by the European authorities and the Spanish government itself clearly indicate a way out of the crisis based on criteria of sustainability and resilience which, in the case of the tourism sector, consists of two aspects. On the one hand, tourism is particularly sensitive to the impact of climate change, such as rising sea levels, extreme weather events, environmental degradation and biodiversity loss. On the other hand, as tourism is an activity that involves high levels of atmospheric pollution and puts great pressure on natural resources, there is ample room for improvement to make the sector more sustainable.

    The World Tourism Organization defines

    the principles of sustainability in terms of the environmental, economic and socio-cultural aspects of tourism development

    In this respect, the World Tourism Organization (UNWTO) defines the principles of sustainability in terms of three areas: environmental, economic and socio-cultural. The first area aims to make optimal use of natural and environmental resources, as well as to preserve biological diversity. The economic aspect corresponds to tourism’s impact on the economy of the locality receiving tourists, in such a way as to promote long-term viable activities, with stable employment opportunities and well-distributed socio-economic benefits. Finally, the socio-cultural aspect seeks to conserve and strengthen the cultural and architectural assets and traditional values of the tourist destination in question.

    How can we measure the sector’s progress towards sustainability?

    In order to gauge the degree of sustainability in the sector and the steps that should be taken in the future, we have created a relevant indicator for each of the three aspects defined by the UNWTO regarding tourism’s sustainability. It should be noted that our analysis has been carried out using data prior to 2020, as the effect of the pandemic on these indicators would distort the analysis contained in this article.

    Most of the tourism industry’s greenhouse gas emissions

    concentrated in the transportation sector

    In environmental terms, we have taken the trend in greenhouse gas (GHG) emissions into the atmosphere by the sectors that make up Spain’s tourism industry.6 For this analysis, we have only taken into account the trend in the three gases that are most emitted into the atmosphere: carbon dioxide (CO2), nitrogen oxides (NOx) and carbon monoxide (CO). The first conclusion that can be drawn is that most of the GHG emissions come from the transport sector (accounting for around 12% of tourism GDP), specifically the emission of nitrogen oxides resulting from combustion engines. These sectors are among the most polluting of all industries. Moreover, the pollution level has increased since 2013 for air transport, and although they have decreased for land transport they are still at an incredibly high level. With respect to accommodation and hospitality services, as well as travel agency and tour operator activities, carbon monoxide is the pollutant emitted most into the atmosphere.7 Although the pollution level are not alarming, far from moderating they actually grew by 78% in the case of accommodation and 38% in the case of agencies and tour operators between 2013 and 2019.

    • 6. This analysis considers the data provided by the National Statistics Institute by branch of activity: accommodation services, food and beverage services (branch 55-56, according to CNAE 2009); activities of travel agencies, tour operators, booking services and related activities (branch 79); land and tube transportation (branch 49), and air transport (branch 51).
    • 7. This type of GHG is produced every time a fossil fuel such as natural gas, propane gas, petrol, oil, kerosene, wood or coal is ignited. In other words, the sector produces this as a result of people using heating and cooling systems and combustion stoves.

    Greenhouse gas emissions by tourism sector

    Accommodation services, food and beverage services

    Last actualization: 26 January 2022 - 09:22

    Activities of travel agencies, tour operators and related activities

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    Land transport

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    Air transport

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    The indicators of economic value consider the contribution made by tourism to the economic sustainability of each destination. The variables we have used to measure this are the average number of overnight stays per month (volume of activity) and the expenditure per tourist (value of that activity). The volume and value of tourism are essential to the economic sustainability of a destination: the greater the expenditure per day, the more efficient the destination in terms of generating tourism value.

    The relationship between volume (number of overnight stays) and expenditure per tourist can be seen in the figure below.8 In the most tourism-oriented provinces (those with more than 10 million overnight stays per year), average expenditure is around 300 euros per tourist. The case of Las Palmas is particularly negative in this respect: it ranks second in terms of overnight stays but only has a modest average expenditure. Among the rest of the provinces, the average expenditure per tourist is below 175 euros. Girona, Alicante and Gipuzkoa are particularly positive in economic terms as they typically have a more modest volume of hotel stays but a very high expenditure per tourist.

    • 8. Total tourist expenditure by province has been estimated using in-person card payments by domestic and international tourists via CaixaBank POS terminals in 2019.

    Economic indicators: tourist expenditure vs. overnight stays

    Y axis: Expenditure/tourist; X axis: Overnight stays (million)

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    Source: CaixaBank Research, based on data from CaixaBank and the National Statistics Institute.

    As a basic indicator to gauge the social and cultural impact of different tourist destinations, we have measured congestion in the various provinces as this influences residents’ satisfaction and is a basic indicator of the social impact of tourism on a community. To this end, we have used the variable of the number of overnight stays in proportion to the resident population, the results of which can be seen in summary form in the map below. In general terms, no significant tourism pressure is observed in most of the country.9 However, the most noteworthy cases are the following: (i) the island regions, eminently beach and nature destinations which receive a lot of international tourism,10 (ii) certain areas close to the border with France that offer beach and mountain tourism (Huesca, Tarragona and Girona) with a small local population and that are visited by neighbouring countries, as well as (iii) certain towns in Andalusia that receive both domestic and international tourism (Malaga, Huelva and Almeria). It seems that congestion in the most tourist-oriented destinations has actually worsened in recent years, given that the population has grown, on average, much less than the number of tourists.11 

    • 9. In Spain, the ratio of the volume of overnight stays to the resident population is slightly above seven, which can be taken as a reference for the average congestion for the country as a whole. Congestion above these levels can be considered as high. In the case of the EU, it is around four, according to data provided by Eurostat.
    • 10. In fact, the Balearic Islands stand out as the European region with the highest congestion in terms of the number of annual visitors they receive, according to regional data provided by Eurostat, ahead of the autonomous province of Bolzano (Italy), the Algarve (Portugal), Tyrol and Salzburg (Austria).
    • 11. In the past 10 years, Spain’s population has grown by 2% on average while international tourist arrivals have increased by nearly 60%.

    Overnight stays as a share of the resident population

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    Source: CaixaBank Research, based on data from the National Statistics Institute.
    Towards a new, more sustainable and competitive model

    In light of the available indicators, it seems evident that there is room for improvement over the coming years. Regarding the environment, pollution levels have actually increased in recent years and the potential areas of improvement range from promoting more energy-efficient buildings and more modern air conditioning systems to more sustainable travel, among other aspects. In economic terms, there is no doubt regarding the importance of the sector for the Spanish economy as a whole, although it will be necessary to keep an eye on those destinations with high levels of congestion, where the sector’s economic contribution is modest. Finally, in socio-cultural terms there are some regions with an increasingly excessive tourism demand, which can make the resident populations uneasy due to congestion problems in small towns with limited public services, especially as they are not always prepared to absorb such a huge seasonal demand.

    The sector’s agenda for sustainability involves implementing initiatives that pre-date COVID-19 and now make it possible to take advantage of funds from Europe.12 Specifically, the Spanish tourism industry is covered by the government’s Recovery, Transformation and Resilience Plan via the policy of «Modernisation and digitisation of the industrial fabric and SMEs, recovery of tourism and promotion of an entrepreneurial nation Spain», in which component 14 outlines a Modernisation and Competitiveness Plan for the Tourism Sector. Within the latter, the area that will receive the most investment is the Strategy for Sustainable Tourism at Destinations, which has an estimated budget of 1.9 billion euros for the next three years.13

    • 12. At the beginning of 2019, the Spanish government and Secretary of State for Tourism had already begun work on Spain’s Sustainable Tourism Strategy 2030, which took into account the need to include sustainability criteria for the sector and began to introduce the objectives and criteria that, through the NGEU funds, have now been established in the new Strategy for Sustainable Tourism at Destinations.
    • 13. The government held the first extraordinary call for Sustainability Plans in November 2021. 615 million euros were disbursed to the autonomous regions, taking into account economic variables (percentage of tourism GDP with respect to regional GDP and the reduction in the number of tourism workers between December 2019 and December 2020), regional variables (the size of the autonomous region as a percentage of the total area of Spain and population density) and tourism variables (number of international tourists received in 2019 and spending by these tourists).
    The ultimate goal is none other than to try

    to improve the competitiveness of Spain’s tourism industry by means of a new model with greater added value

    The objective of these initiatives is not only to ensure that Spanish destinations are capable of integrating environmental, socio-economic and regional sustainability criteria into the tourism products and services they supply but also to develop resilience strategies in the face of current challenges (climate change, excessive demand for tourism, health and safety-related crises) and to achieve greater cohesion among the different regions. In other words, to improve the distribution of the burdens on the country and establish an integrated approach to help slow down its depopulation. The ultimate goal is none other than to try to improve the competitiveness of Spain’s tourism industry by means of a new model that is more sustainable, of higher quality and, therefore, of greater added value.

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  • The use of water in agriculture: making progress in modernising irrigation and efficient water management

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    This winter’s drought has highlighted one of the most important challenges facing Spain’s agrifood sector: improving how water resources are used given the prospect of their availability becoming more limited.

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    This winter’s drought has highlighted one of the most important challenges facing Spain’s agrifood sector: improving how water resources are used given the prospect of their availability becoming more limited. Climate change demands that huge efforts be made to adapt Spain’s irrigation system to the new circumstances and, in this respect, the investments made possible by the Next Generation EU (NGEU) funds will be a huge support. The main objective of these funds is to modernise irrigation systems and improve their governance, promoting water savings and energy efficiency through more efficient irrigation systems, self-consumption electricity generated from renewable energy sources, and the use of non-conventional water sources such as reclaimed waste water or desalinated water.

    Water scarcity, a challenge for the world’s agriculture

    Water is a crucial resource for agriculture. Globally, 72% of all freshwater extracted is used by the agricultural sector. Of the remainder, 12% is used by industry and to produce energy, while 16% is used directly for human consumption. The FAO estimates that, by 2050, agriculture will have to produce almost 50% more food, fibre and biofuel than in 2012 to meet global demand,11 a goal that will be difficult to achieve without increasing the area devoted to irrigation considering the higher yields produced: non-irrigated agriculture produces 60% of the world’s food and occupies 80% of cultivated land, while irrigated agriculture produces 40% on 20% of the land.

    • 11. The FAO predicts an increase in demand for biofuel driven by the more limited use of fossil fuels, as well as an increase in food consumption in the face of a growing world population, increased urbanisation and a shift from a primarily starch-based diet to a growing demand for more water-intensive meat and dairy products as incomes rise in many countries. See the SOLAW Report «The State of Land and Water Resources for Food and Agriculture», FAO (2021).
    Water is an essential commodity for agriculture. Climate change is making water a scarcer and more unpredictable resource.

    More intensive agricultural practices are putting more stress on freshwater resources, further exacerbated by the consequences of climate change. In many regions of the world, including some in Spain (see the map below), the resource is subject to high levels of water stress.12 Furthermore, water stress levels are likely to increase in those areas that are currently under most stress as the effects of climate change intensify. In Spain, an overall larger reduction in water resources is expected in the south of the mainland and on the islands.13

    • 12. Water stress is deemed to be «high» when, on average, more than 40% of the available water supply is extracted each year and when the demand for water is greater than the amount available during a certain period of time. Spain is one of 44 countries with «high» levels of water stress (World Resources Institute, 2019).
    • 13. See «Evaluación del impacto del cambio climático en los recursos hídricos y sequías en España», CEDEX, 2017.
    Integrated water management must make the achievement of environmental targets compatible with socio-economic goals.
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    This serious situation makes it essential to have a system of integrated planning and management of water resources that guarantees supply in sufficient quantity and quality, based on criteria of sustainability, adaptation to climate change and in line with the principles of the circular economy. Likewise, water management must promote compliance with the environmental targets set by the EU in the European Green Deal and the Water Framework Directive, as well as achieving the targets set by the United Nations 2030 Agenda in Sustainable Development Goal 6 (SDG6, Ensure availability and sustainable management of water and sanitation for all).

    The importance of irrigation in Spain

    In Spain, the agricultural sector accounts for 82.1% of water use (households use 12.8% and the remaining 5.1% is used for other economic activities).14 In fact, irrigation is a fundamental part of our agrifood system: the irrigated area in Spain accounted for 22.9% of the cultivated area in 2021 (7.8% of the total geographical area) but its production contributes slightly more than 50% of the final plant production. Without any doubt, irrigation is the fundamental pillar on which the production and export potential of the fruit and vegetable sector rests. In fact, Spain is the leading exporter of fruit and vegetables in the EU and one of the top three exporters in the world, along with China and the US, a prominent position that has given it the name of «the vegetable garden of Europe».

    • 14. Data from the satellite water account (INE) for 2010, latest available data. Most of the water used by the agricultural sector is for irrigation. Water consumption by livestock is low. However, of great importance is the effect that the production and management of livestock waste can have on bodies of water.
    Irrigation has undergone a continuous process of modernisation that is leading to the progressive expansion of efficient irrigation techniques.

    The charts below show the considerable increase in irrigated land in Spain between 2004 and 2021, up by more than half a million hectares to 3.9 million hectares at present.15 During this period, however, water consumption by the agricultural sector has remained fairly stable (or has even tended to decrease slightly) thanks to a significant effort to modernise irrigation systems. In fact, over the years the area irrigated by localised (drip) systems, a much more efficient technique with a very low demand for water, has increased to the detriment of the gravity system, which consumes much more. Sprinkler systems, a method more typical of herbaceous crops, have also been implemented over the years.

    • 15. This increase in irrigation has been accompanied by the development of hydraulic infrastructures such as reservoirs and water transfers, which are essential for the transport and control of water.

    The amount of irrigated land has increased considerably

    Last actualization: 12 April 2022 - 12:27

    Breakdown of water used by farms by irrigation technique

    Last actualization: 12 April 2022 - 12:29

    This expansion of more efficient irrigation techniques reflects a coherence with the irrigation policies developed in recent years aimed at achieving sustainable, efficient agriculture. However, as already mentioned, the modernisation of irrigation has not been accompanied by aggregate savings in water as there is often a simultaneous intensification of crops, achieving a higher yield per m3 of water used but, on the other hand, the amount of irrigated water returned to bodies of water is reduced.16

    By crop type, the largest areas being irrigated in 202117 were: grain cereals, which accounted for 24.1% of the total irrigated area, followed by olive groves (22.6%), non-citrus fruit trees (10.6%) and vines (10.3%). These three types of crops are the ones that have seen the greatest growth in irrigated area between 2004 and 2021, olive groves particularly, adding almost 400,000 hectares. On the other hand, if the irrigated area is analysed in the total of each of the crop groups, it can be observed that irrigation is the majority in some of them, such as citrus and vegetables (93.7% and 88.4%, respectively).

    The irrigation technique used depends largely on the type of crop. Gravity irrigation is mainly used for cereals and forage crops, accounting for 45.0% and 53.4% of their respective irrigated crop areas. Sprinkler irrigation is mainly used for tubers (77.9%) and other herbaceous crops such as legumes, industrial plants and cereals. Finally, localised (drip) irrigation is the most common system for woody crops such as olive groves, vines and fruit trees, both citrus and non-citrus. The drip irrigation system is also important for vegetables (52.2%), including the area of land covered by greenhouses.

    • 16. Irrigated water returned represents all water flows coming from irrigation and returning to rivers, groundwater, etc.
    • 17. Data from «Encuesta sobre Superficies y Rendimientos de Cultivos» (ESYRCE, 2021) and «Análisis de los regadíos españoles, año 2020», both published by MAPA.
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    Notable regional differences in irrigation

    The extent of irrigation, crop specialisation and irrigation techniques show a remarkable geographical diversity (see the table below). For example, in the northern regions, abundant rainfall makes irrigation unnecessary in many cases while the plateau, which is more water-deficient, has a moderate share of irrigation. The Community of Valencia and the Region of Murcia are the autonomous regions with the highest percentage of irrigated agricultural land (around 40%). As is widely known, they specialise in the production of fruit and vegetables, which tend to use drip irrigation techniques.

    Andalusia is the second region with the highest percentage of irrigation as a proportion of its geographical area (12.9%), with a significant presence of drip-irrigated olive groves. In Castile and Leon, cereal production is dominated by sprinkler and self-propelled irrigation, while vines predominate in Castilla-La Mancha (51% of the region’s irrigated area is devoted to this crop) with drip irrigation. Gravity irrigation is mainly found in the irrigated lands of the Ebro basin (Catalonia, Aragon and Navarre) for herbaceous crops.

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    Irrigated crop yields are naturally higher than non-irrigated yields, with notable differences across different crop types and regions. Note that regional differences in yield can be considerable for certain crops, even between plots located in close proximity because yield can be affected by many other factors in addition to irrigation (plot orientation, environmental factors, fertilisers, etc.). For illustrative purposes, the following table shows the average irrigated and non-irrigated crop yields, measured as the number of kilograms produced per hectare for three crops that are representative and widespread in Spain: grapes for processing (wine), olives for milling (olive oil) and soft wheat.

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    Irrigated crop yields are higher than non-irrigated yields, with notable differences across different crop types and regions.
    The NGEU funds: a fresh impetus for modernising irrigation

    The Plan to improve efficiency and sustainability in irrigation (investment 1 of Component 3 of the Recovery, Transformation and Resilience Plan, PRTR) establishes an investment of 563 million euros to modernise over 100,000 hectares of existing irrigated land.18 In 2021, around 260 million euros of this item had already been allocated, corresponding to the first phase of the irrigation modernisation programme implemented by the public corporation for agricultural infrastructure (Seiasa). The Plan prioritises those actions with a high impact on environmental sustainability or with an important innovative component, such as the incorporation of technologies and digital tools in irrigation communities to achieve more efficient irrigation.19 As for actions with a high environmental impact, priority is given to irrigation modernisation actions that include the generation of self-consumption of electricity from renewable energy sources; for instance by using water conduits to generate electricity, or actions that use non-conventional water sources such as reclaimed waste water or desalinated water.20

    • 18. This amount rises to 704 million euros when the expected contributions from irrigation communities are included.
    • 19. The Agroclimatic Information System for Irrigation (SiAR) provides information on the water demands of irrigated crops, helping to optimise the use of water resources.
    • 20. See «Fomento de la reutilización de las aguas residuales - Informe complementario», MITECO, 2020.
    NGEU funds prioritise irrigation modernisation schemes with greater environmental impact and incorporating the use of new technologies.
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    Modernising irrigation should help to comply with the EU Water Framework Directive as it contributes to the protection of surface water by reducing its extraction for irrigation. It can also help to meet the objectives of the Nitrates Directive21 and those of reducing soil contamination from phytosanitary products, since the implementation of sprinkler and drip irrigation systems enables fertilisers and phytosanitary products in the irrigation water to be added the dose strictly necessary and at the time the crop needs them. The use of reclaimed water, which already contains nutrients, would also help to reduce the amount of fertilisers used. All this would be in line with the EU policies that form part of the European Green Pact, such as the Farm to Fork strategy and the European strategy on adaptation to climate change.

    The PRTR also has significant measures to encourage reforms, along with the investment plan. The government proposes to establish a National Irrigation Board, a Spain-wide governance mechanism that will enable all representatives of public authorities and affected sectors to promote and facilitate cooperation, consultation and the sharing of information on all aspects related to irrigation. An Irrigation Sustainability Observatory will also be set up to provide objective data on the economic, social and environmental impact of irrigation on the territory.22

    In short, irrigation is essential for agricultural production, key to food security and a fundamental pillar of rural development. Its modernisation is crucial in order to achieve a competitive, profitable and water-efficient agricultural industry. Looking to the future, climate change scenarios for Spain predict that less water will be available (available water resources will decrease between 12% and 40% before the end of the century, depending on the region) and a more irregular distribution of rainfall, making it essential to continue improving the efficiency and sustainability of irrigation.

    • 21. In December 2021, the European Commission decided to refer Spain to the CJEU for failing to take sufficient measures in relation to nitrate pollution from agricultural sources. Return flows from irrigation are considered to be the largest diffuse (non-point) contributors to surface and groundwater contamination.
    • 22. On 9 March 2022, the Ministry of Agriculture, Fisheries and Food launched a public consultation on the draft royal decree to set up the board and observatory for irrigation.
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  • How the agrifood sector is becoming more sustainable

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    Climate change and the struggle to prevent it pose enormous challenges for agrifood production in Spain. In turn, improving the sustainability and resilience of the sector will be key to achieving the environmental targets set out in the European Green Deal. Agri-environmental indicators show that, despite some progress in recent years, the sector needs to tackle significant aspects, such as reducing the use of chemical pesticides, fertilisers and antimicrobials in agriculture, as well as improving animal health and welfare, increasing efficiency in the use of energy and water resources, promoting food consumption that is more sustainable and healthier and reducing food loss and waste, fostering a circular economy. The new CAP, with eco-schemes as its key measure, and the Next Generation EU funds will support the sector’s green and digital transition.

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    The threat of climate change and transition to a sustainable food system

    Spain’s agriculture has traditionally benefited from a privileged geographical location and climate but it is particularly vulnerable to climate change. Increased soil erosion, floods, droughts and wildfires, along with an increase in pests and diseases, are just some of the direct effects. In turn, primary sector activity also contributes to climate change: crop specialisation and intensification, the use of chemical inputs and the industrialisation of livestock production all have negative impacts on water, soil, air, biodiversity and habitat conservation.

    Agriculture contributes to climate change and, in turn, suffers directly from its consequences

    It must therefore move towards a new model that protects the natural resources on which it depends.

    EU countries are increasingly aware that they need not only to mitigate climate change but also adapt to it. Consequently, given growing concerns for the environment, the agrifood sector must move forward in its transition from a system that emits greenhouse gases (GHG), demands a large amount of natural resources and also pollutes them, to a new model, increasingly widespread, that provides healthy, nutritious food sustainably, protecting the natural resources on which agricultural activity itself depends.

    In addition to improving the sustainability of agrifood production and downstream distribution, another important lever for change is to promote healthier and more environmentally sustainable consumption patterns. For example, a diet with a larger proportion of vegetables, organic foods, seasonal and local produce. Similarly, the reduction of food loss and waste and promotion of the circular economy are also key factors in moving towards a sustainable food system, as stated in the European Commission’s «Farm to Fork» strategy.

    The Farm to Fork strategy

    The Farm to Fork strategy
    Source: European Commission.
    From the European Green Deal to the CAP Strategic Plans

    The EU is deploying a wide range of tools to provide stakeholders with mechanisms and incentives to support this transition to a sustainable food system and, in turn, to help achieve the targets set out in the European Green Deal. One important addition in the reformed Common Agricultural Policy (CAP), which will enter into force in January 2023, is the drafting of National Strategic Plans to establish priorities in terms of aid and incentives for the various production subsectors.6The star measure is eco-schemes, which are voluntary and reward sustainable practices. Spain’s Ministry of Agriculture has proposed two eco-schemes, with a budget of 1,107.49 million euros, which group sustainable practices into two areas: agroecology and low carbon agriculture. The first group includes activities such as pasture management using sustainable mowing, crop rotation and the maintenance of non-productive areas and other biodiversity aspects. The second group includes extensive grazing, conservation agriculture and the maintenance of living or dead vegetation cover.

    • 6. Spain’s Ministry of Agriculture, Fisheries and Food must submit its Strategic Plan to the European Commission by 30 December 2021.
    The new CAP, with eco-schemes as its key measure,

    together with Next Generation EU funds, will support the sector’s green and digital transition.

    In addition to the CAP, the European NGEU funds will also help to finance the green and digital transition of the primary sector. In particular, item 3 of Spain’s Recovery, Transformation and Resilience Plan, aimed at the environmental and digital transformation of the agrifood and fisheries system, provides for an investment of 1,502.8 million euros. The plan is based on four fundamental pillars: (i) improving efficiency in irrigation, (ii) promoting sustainability and competitiveness in agriculture and livestock farming, (iii) a digitalisation strategy for the agrifood sector and the rural environment, and (iv) modernising the fisheries sector, by promoting sustainability, research, innovation and digitalisation.

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    Environmental indicators in the primary sector

    The European Commission has analysed the situation of individual Member States in relation to their contribution to each of the Green Deal ambitions. The table below lists these targets and the reference values of these indicators for the main countries.7

    To make Europe the first climate-neutral continent by 2050, the first milestone has been set for 2030: reduce greenhouse gas (GHG) emissions by at least 55% compared with the 1990 level. While GHG emissions from EU agriculture have fallen by a significant 20% since 1990, no progress has been made since 2005. And in Spain the situation has been reversed: emissions have increased since 1990 (6.5%) with just a modest reduction since 2005 (–3.7%).

    • 7. «Commission recommendations to Member States as regards their strategic plans for the CAP», European Commission, December 2020.
    In relative terms, GHG emissions by Spain’s agricultural sector

    are lower than the EU average, which has set itself the target of at least 55% below 1990 levels by 2030.

    Despite this trend, it is important to note that, in relative terms, the sector is responsible for 12.0% of the economy’s total GHG emissions compared with an EU average of 12.7%. Furthermore, if we take into account the fact that the primary sector contributes 2.9% of GDP compared with 1.6% in the EU, the result is that GHG emissions by Spain’s agrifood sector per unit of GVA are significantly lower than the European average (1.2 kg/euro compared with 1.7 kg/euro in the EU).8 Similarly, emissions from agriculture per unit of agricultural land (tonnes of CO2 equivalent per hectare) are lower in Spain (1.6 compared with 2.5 in the EU).

    The second EU milestone is contained in the Farm to Fork strategy, which sets a target of 50% reduction in the use and risk of chemical pesticides by 2030. In recent years, Spain has significantly reduced the use of this type of chemical and the challenge is to continue moving in this direction. The target for antimicrobial resistance is a 50% reduction of the overall antimicrobial sales for farm and aquaculture animals by 2030, compared with the EU baseline in 2018. In this respect, Spain lags behind the EU average.

    On the other hand, Spain performs positively both in its share of agricultural land used for organic farming, an aspect we discuss in more detail in the next section, and the proportion of agricultural land occupied by highly diverse landscape features. In this case Spain, with 13.2% of its land, already exceeds the target of 10%.9

    • 8. Data from the European Commission’s Common Monitoring and Evaluation Framework (CMEF) for the CAP 2014-2020, https://agridata.ec.europa.eu/extensions/DataPortal/cmef_indicators.html
    • 9. EU Biodiversity Strategy 2030.

    European Green Deal targets and reference values

    European Green Deal targets and reference values
    Notes: GHG stands for greenhouse gases. UAA stands for utilised agricultural area. Source: CaixaBank Research, based on the European Commission’s COM (2020) 846.
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    Nitrate pollution from agriculture remains one of the greatest pressures on the aquatic environment. In this respect, the EU has set a target of reducing nutrient losses by at least 50% by 2030 while ensuring there is no deterioration in soil fertility, an aspect in which Spain needs to improve considerably. An increasing number of EU countries are also affected by water scarcity, often caused by excessive abstraction of water for agriculture and livestock. Climate change will further aggravate the problem of water availability in many regions, including Spain.

    Finally, the new CAP establishes digitalisation as a priority across the board, believing that the transition towards a sustainable food system must be supported by knowledge, innovation and digitalisation. In this respect, one key factor in developing rural areas and reversing their depopulation is the availability of a fast, reliable internet connection. While there has been a notable increase in the proportion of households in rural areas with next-generation broadband access, there is still a significant gap with respect to urban areas. The goal is to cover 100% of the population by 2025.10

    • 10. This target is included in the Agenda España Digital 2025.
    58.7% of Spanish households in rural areas

    had access to fast broadband internet in 2019. The goal is to cover 100% of the population by 2025.

    The green and digital transition of European agriculture is also creating new business opportunities which the sector must take advantage of, for example by better aligning its production with evolving consumer tastes. Sustainability will become a competitive advantage for those companies and farms that achieve a balance between economic growth, environmental care and social well-being, while those that fail to comply with environmental standards will be penalised by increasingly demanding and environmentally aware consumers who identify with the most sustainable brands and products.

    A firm commitment to boosting organic production

    The commitment to more sustainable production schemes, such as organic farming,11 is relentless. Spain, with more than 2.44 million hectares of these crops in 2020, is the first country in the EU and the third in the world after Australia and Argentina. However, in terms of its share of utilised agricultural area (UAA), it is above the EU average, as noted in the previous section, but well below leading countries such as Austria, Estonia and Sweden, which exceed 20%. Four million additional hectares would be needed to achieve the 25% target set in the Organic Action Plan.

    • 11. Organic farming is a system of agrifood production and management that combines the best environmental practices, a high level of biodiversity and preservation of natural resources and the application of high animal welfare standards, so that products are obtained from natural substances and processes (MAPA).

    Share of utilised agricultural area under organic farming

    Last actualization: 13 October 2021 - 16:38

    Regarding organic operators,12 almost 90% out of a total of 50,047 in 2020 were primary producers while the rest were industrial operators and traders. However, the number of operators is growing much faster (more than double) further down the food chain.

    • 12. An organic operator can be an individual or company and must meet certain requirements to be able to produce, process, prepare or package food of agricultural origin in order for it to be marketed using the terms ecological, biological or organic. In Spain there is a General Register of Organic Operators (REGOE) that collates the information provided by each autonomous region.
    p15

    By region, Andalusia leads the field both in terms of land under organic farming, with more than 45% of the total, and in terms of organic livestock farms, with almost 60%. By type of crop, cereals for grain production come top (43% of the total) and, by type of livestock, cattle (48%). Compared with other countries, the Spanish agrifood sector is the world’s leading organic producer of olive oil and wine and the second for citrus fruits and vegetables.

    However, one of the challenges facing organic production in Spain is the low domestic consumption: per capita consumption of these products in 2019 stood at 50.2 euros, a far cry from countries such as Denmark or Switzerland, which exceed 300 euros. As a result, most of Spain’s organic produce, around 60%, is exported.13 The change in habits brought about by the pandemic has boosted healthier, more sustainable and local consumption, so the trend in domestic consumption of organic produce is clearly upward.

    • 13. Sociedad Española de Agricultura Ecológica (SEAE), MAPA (2021), «Análisis de la caracterización y proyección de la producción ecológica española en 2019» and Ecovalia (2021), «Informe anual de la producción ecológica en España».
    Organic farming in Spain, on the rise

    Area under organic farming

    Last actualization: 13 October 2021 - 16:38

    Organic operators in the primary sector (producers)

    Last actualization: 13 October 2021 - 16:39

    Organic operators in the secondary sector (manufacturers and processors)

    Last actualization: 13 October 2021 - 16:40
    Destacado Economia y Mercados
    Desactivado
    Destacado Analisis Sectorial
    Activado
    Destacado Área Geográfica
    Desactivado

Error message

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2022: return to normality?

The starting point for next year is a global economy that is recovering much of the growth lost during the pandemic, thanks to the success of the vaccines and an extraordinary revival in demand for durable goods that has not been met by supply, creating bottlenecks that have ended up distorting value chains and leading to an unexpected surge in inflation.

Content available in
bottlenecks

For much of the crisis that has been crippling the international economy since the beginning of 2020, we have longed for a return to normality and, with it, a recovery in GDP levels and economic trends to those which were present in the now distant Q4 2019. In doing so, we have overlooked the fact that the economic landscape of two years ago was not exactly idyllic either (risk of secular stagnation) and, above all, that COVID is accelerating structural changes which we all saw coming on the horizon but were unable to assign a date to. So, if the question is when will we recover the «economic normality» lost in the last two years, then the answer is probably never. Soon enough, we will be back to producing the same amount of goods and services as we did at the end of 2019 (China, the US and much of the OECD has already done so), and we will even close the gap with where we should have been in the absence of the pandemic based on the long-term trend (see first chart). However, that gross domestic product will be achieved with a combination of different production factors and with a composition, on both the demand and the supply side, which will also differ from that which existed pre-COVID. These differences can be seen in the shape which the revival in employment is taking in countries like Spain, which, in addition to sound economic policy responses (furlough schemes, etc.), clearly reflects the particular idiosyncrasy of the recovery phase in which we are now immersed.

Cumulative change in real GDP up to Q3 2021

In this regard, at the end of the crisis there will be winners and losers and we will not return to the exit gate, as the classic process of creative destruction which occurs in any recession is proving even more acute this time. This is the case both due to the particularly disruptive nature of the pandemic and because it is coinciding with the disruption caused by digitalisation and the need to improve the sustainability of our production model. If a crisis occurs when «the old is dying and the new cannot yet be born», then there is no better definition to describe the current moment, which is especially convulsive and complex, given that we are witnessing the biggest mismatch between supply and demand since China joined the global production chain. The peculiar nature of this crisis, as an economic shutdown linked to mobility restrictions rather than a drastic adjustment in financial or real asset prices (balance-sheet recession), has led to an intense recovery in demand after the lockdowns, and this has pushed value chains to their limits while also showing us that, sometimes, sophistication also comes with fragility.

Thus, while the underlying trends that will characterise the post-COVID economy are gradually taking shape (changing consumption patterns, reconsideration of the role of the public sector, new central bank strategies, etc.), economic activity over the next 12 months will continue to depend on: how the pandemic evolves and how it affects mobility, the restoration of supply chain functions and, finally, the adaptation of economic policy to this new phase of the economic cycle. In other words, the dynamics of the recovery will be determined by the rebalancing of global supply and demand, which in turn will depend on how flexible production proves to be in adapting to a demand that will continue to be stimulated by extremely expansive financial conditions as well as by the constraints of the fiscal stimulus plans set in motion on both sides of the Atlantic. Everything rides on the capacity of supply to respond, having been hampered for the past decade both by the absence of reforms to make the economic structure more flexible and by weak public and private investment. If the adjustment occurs in the first half of the year, then the latent macroeconomic imbalances will be absorbed and we will return to a reflation scenario, albeit with the global economy making a soft landing as it converges towards its potential growth rates.

In this baseline scenario, the world economy will continue to show buoyant growth in 2022 (4.5%), albeit some 1.5 pps lower than this year. Much of the slowdown will be explained by the loss of momentum in both the US (3.5% in 2022 vs. 5.4% in 2021) and China (5.7% vs. 8.3%), both of which will already have left the period of recovering the GDP lost during the crisis well behind them and will be gradually approaching their long-term trend levels of growth. In the case of the euro area, the cruising speed will not change much (4.7% vs. 5.1%), both because of the maintenance of the monetary and fiscal stimuli (with NGEU funds) and due to the «rebound effect» which can be expected in countries of the region which performed relatively worse in the latter half of 2021 (Germany and Spain), assuming that industry and tourism recover as expected.

Beyond the potential for new variants of the virus such as Omicron to distort economic activity, the outlook will ultimately be shaped by how inflation behaves, the central banks’ exit strategies and how the financial markets assess the suitability of the financial conditions that are in place at any given time. The biggest risk is that the supply chain problems persist throughout the coming year, or that the disruptions in labour markets such as that of the US become more than a temporary feature. In that case, it is very unlikely that the price rallies in the more volatile components of the consumer price index will remain contained without filtering down to the other components to some extent, given that industrialised countries will be very close to closing the output gap by the end of next year. This would call into question the hypothesis being defended by many monetary authorities, namely that the current inflation rally is of a transitory nature.

With real interest rates at historical lows (see second chart), if we are to avoid threats to financial stability it is essential that the credibility of the central banks is upheld at all times. This will involve keeping a close eye on inflation expectations, and thus avoiding falling behind the curve for too long. However, differences in countries’ cyclical position (the recovery is proving highly asymmetric), as well as in the very credibility of the central banks themselves, are already resulting in very different rates of monetary normalisation between emerging and developed countries. This lack of monetary coordination could end up causing mismatches in exchange rate behaviour, another potential medium-term risk. The key, therefore, remains to keep the financial channel free from potential tensions in order to avoid the problems of the Great Recession of 2009.

Real yield on 10-year sovereign debt in the US and Germany

In short, the starting point for next year is a global economy that is recovering much of the growth lost during the pandemic, thanks to the success of the vaccines and an extraordinary revival in demand for durable goods that has not been met by supply, creating bottlenecks that have ended up distorting value chains and leading to an unexpected surge in inflation. The economy, like football, is a short blanket. If you prioritise growth at all costs, you will most likely end up with economic imbalances if your supply lacks the capacity and flexibility to respond. So, on the cusp of a new year, we cannot rule out the possibility that the ingredients laid before us will expose us to unexpected emotions: new mutations of the virus, inflation above central bank targets, mismatches between supply and demand, bottlenecks in a production chain that we thought was infallible, rising inequality, accelerated digitalisation, very high levels of debt, etc. In that sense, it does not look like we will be returning to the old normal. And as is well known, exceptional times call for exceptional measures.

 

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