The present work examines the intertemporal causal relationship between environmental damage from carbon emissions released by agriculture per 1000 ha of utilized agriculture area and economic performance in the sector of agriculture as described by net value added per capita. The autoregressive distributed lag bounds testing approach is employed to examine this linkage, for three new entrant EU countries, namely, Bulgaria, Czech Republic, and Hungary. The environmental Kuznets hypothesis is confirmed in the long run for Bulgaria and Czech Republic while in the short run is validated only for the case of Czech Republic. The results indicate that the adoption of environment-friendly farming practices and crops' selection does not secure simultaneous high economic and environmental performance at least in the short run for our sample countries and also in the long run for Hungary necessitating the modification of the agro-environmental measures adopted to make those two targets complementary and not mutually exclusive for a farmer.
Keywords: Agro–environmental policy; CAP; New EU member states; Sustainable agriculture.