3 MARTINDALE CENTER FOR THE STUDY OF PRIVATE ENTERPRISE Barriers to agricultural sustainability In Croatia, protection and conservation of the natural environment often are framed not as domestically driven goals but as conditions of EU membership. Environmental standards are viewed through their economic implications: how they affect growth, compliance costs, and eligibility for EU subsidies (Pečurlić et al., 2025). Framing environmental policy as a financial tool can help promote biodiversity protection, inclusive farmer funding, and widespread clean agricultural practices. But the focus on income ultimately limits the sector’s ability to pursue longterm environmental transformation. Although agriculture plays a larger economic role in Croatia than in many other member states, the sector lags in productivity and competitiveness relative to the EU average, inhibiting environmental investments. Agriculture contributes 3.3% to the GDP, compared to 1.7% across the EU, and 6.2% to employment versus 4.5% in the EU. However, the sector is characterized by small farm sizes, low-value crops, and limited R&D investment, all of which constrain productivity and competitiveness (Boromisa et al., 2024). Nearly 70% of Croatia’s farms cover less than 5 hectares, limiting production capacity and access to equipment (Boromisa et al., 2024; Hadelan et al., 2022). Land fragmentation, characterized by small and disconnected farm parcels, hinders efficiency and restricts ecological practices that integrate land management and investment. Larger farms are more willing to participate in such initiatives, while smaller farms, representing the majority, perceive them as economic risks and a burden on their limited production capacity (Pečurlić et al., 2025). Croatia’s integration into the Common Agricultural Policy framework facilitates farm modernization, financial support, and long-term development. This initiative aims to equip family farms to be adaptable, resilient, and market focused. Under that policy, member states implement Rural Development Programmes in accordance with their specific socioeconomic and environmental needs. These programs prioritize sustainability: At least 30% of public expenditure must fund climate action and environmental sustainability efforts, through agri-environment-climate measures, organic farming, and land management within the Natura 2000 network (European Commission, 2022; Pečurlić et al., 2025). Because participation mandates that farmers comply with complex regulatory and reporting procedures tied to environmental performance, EU compliance is framed as a burden rather than an opportunity for sustainable growth of the sector (Pečurlić et al., 2025). Implementing EU environmental practices like sustainable land and water management and reductions in agricultural pollution requires structural changes beyond legislative compliance; it necessitates a shift in how environmental policy is understood. Current initiatives have expanded support for farm operations and established accountability mechanisms. Yet they maintain relatively low thresholds, pointing to an ongoing need for stronger regulations and enforcement that prioritize sustainability as a main driver of the sector’s long-term success. Tourism’s sustainability dilemma Tourism is a vital pillar of Croatia’s economy, shaping national policy, employment, and standards of living. The sector accounts for 20%–25% of GDP, making Croatia one of the most tourism-dependent countries in Europe (Buturac & Rasic, 2024). This reliance increases vulnerability to external shocks, whereby the rapid expansion of a dominant, non-tradable sector attracts labor and investment away from tradable industries, in particular manufacturing, weakening long-term economic diversification (Beg & Basarac Sertić, 2020; Brahmbhatt et al., 2010). The COVID-19 pandemic exposed this vulnerability, with tourism disruptions contributing to an economic decline of almost 9%. This dependence introduces significant environmental and economic pressures. The sector is characterized by intense labor demands, strong seasonality, relatively low wages, and workforce competition from the influx of foreign labor (Bolfek et al., 2025; Denona Bogović & Sverko, 2020). Tourist areas become ghost towns outside the summer months. Croatia is also experiencing overtourism; in 2024, the country hosted 18.3 million tourists, significantly surpassing its population of almost 4 million (Buturac & Rasic, 2024) and placing significant strain on infrastructure, natural resources, and local communities. Increased waste generation, water and energy consumption, and habitat degradation have become major concerns, especially in coastal regions (Bolfek et al., 2025). In protected areas, rising visitor numbers create a 45% greater likelihood of environmental threats (Mileusnić Škrtić et al., 2024). These pressures carry significant economic costs: In 2018, a peak tourism year, the cost of environmental degradation related to tourism was estimated at €55M, or 0.6% of tourism-generated GDP (World Bank, 2021). Costs are expected to increase substantially
RkJQdWJsaXNoZXIy MTA0OTQ5OA==