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Reforming the Common Agricultural Policy: Decoupling Agricultural Payments from Production and Promoting the Environment

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  • Esther Boere
  • G. Cornelis van Kooten

Abstract

In this paper, we analyze the potential impact on producers’ land-use decisions in moving from support payments based on entitlements to a single farm payment (SFP). Further, we then consider a single farm payment with a greening component as part of the 2013 CAP reform. Using data for representative crop farms of different sizes in the Netherlands, we develop a farm-level crop allocation model that is calibrated using positive mathematical programming. We use a two-step calibration method to determine a nonlinear cost function and farm-specific risk aversion coefficients. Not unexpectedly, we find that the 2013 CAP reforms will cause farmers to shift away from crops previously eligible for payments, with the initial shift under the SFP enhanced by the move towards SFP combined with green payment.

Suggested Citation

  • Esther Boere & G. Cornelis van Kooten, 2015. "Reforming the Common Agricultural Policy: Decoupling Agricultural Payments from Production and Promoting the Environment," Working Papers 2015-01, University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group.
    • Handle: RePEc:rep:wpaper:2015-01
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    References listed on IDEAS

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    Cited by:

    1. Liu, Xuan & Duan, Jun & van Kooten, G. Cornelis, 2015. "An Evaluation of the Effects of Changes in the AgriStability Program on Producers’ Crop Activities: A Farm Modeling Approach," Working Papers 201654, University of Victoria, Resource Economics and Policy.
    2. Solazzo, Roberto & Pierangeli, Fabio, 2015. "A two-step modeling approach for the impact assessment of greening in Italy," 147th Seminar, October 7-8, 2015, Sofia, Bulgaria 212246, European Association of Agricultural Economists.
    3. Solazzo, Roberto & Pierangeli, Fabio, 2016. "How does greening affect farm behaviour? Trade-off between commitments and sanctions in the Northern Italy," Agricultural Systems, Elsevier, vol. 149(C), pages 88-98.

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    More about this item

    Keywords

    Agricultural policy and CAP reform; mathematical programming; agricultural business risk management;
    All these keywords.

    JEL classification:

    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies

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