Modelling of Agricultural Behaviour under the CAP Regime: Assessment of Environmental Impacts and Policy Effectiveness

Abstract

Farming activity is modeled under the generalized CAP regime and the environmental impact, along with the policy e¤ectiveness of the various CAP regimes are assessed both in a static and dynamic context. Commission's declaration that Agenda 2000 induces integration of environmental considerations into farming behavior is put under question. Even though the fully decoupled CAP regime is environmentally superior to the present regime of partial decoupling in terms of main production choices and that its environmental performance is enhanced by the incorporation of performance standards, there are disputes whether the transition from the full coupling regime to the regime of partially or fully decoupled payments has in fact induced farmers to enhance their environmental performance. Static and dynamic optimality analysis indicated that it may be socially optimal to maintain coupled payments, as well as to impose farmers an extended set of penalties. Given that such measures are not foreseen by the current structure of CAP and that the definition of farm-specific and time flexible measures is practically infeasible, Agenda 2000 and Mid-term review fail to induce first-best solutions leading to suboptimalities

Conference

93th Seminar of the European Association of Agricultural Economists (EAAE)

SLU Authors

• Passa, Constadina

  • Department of Economics, Swedish University of Agricultural Sciences
    

UKÄ Subject classification

Environmental Sciences related to Agriculture and Land-use
Economics and Business
Social Sciences


Permanent link to this page (URI)

https://res.slu.se/id/publ/24670