Cap reform: modelling supply response subject to the land set-aside

This paper uses duality theory to develop a model of European Community agriculture. The model is used to investigate the impact of the land set-aside provision of the recent package of reforms of the Common Agricultural Policy. We assume that producers chose output and variable input levels that maximize difference between revenue and variable cost. By including first-order conditions for the allocation of land across its uses, we impose that the observed allocations are profit-maximizing allocations. To overcome the problem of incorporating many outputs into an estimable production structure, we imposed a priori the restriction that the technology was weakly separable in major categories of outputs. With this restriction, it was possible to model production decisions in stages using consistent aggregates in the latter stages.     

The Effects of Direct Payments on Technical Efficiency of Irish Beef Farms: A Stochastic Frontier Analysis

The 2003 Mid‐Term Review of the CAP sought to refocus the EU's farm support policy to foster a more competitive and market‐orientated agricultural sector. The foundation of this reform comprised the introduction of decoupled payments to farmers, replacing the EU's previous system of supports that were directly linked to production of designated crops and livestock. This paper explores the effect of coupled payments and their subsequent replacement by decoupled support, on the technical efficiency of specialist beef farms in Ireland. Given the high reliance of beef farmers in Ireland on CAP payments, the decoupling of payments has been especially important for the sector. A stochastic production frontier is estimated using a panel dataset comprising detailed accountancy data for Irish beef farms between the years 2000 and 2013. Our results indicate that technical efficiency in the beef farming sector has been consistently poor, with an average efficiency score of only 0.53 during the period analysed. However, we found that direct income received in the form of coupled payments had a positive impact on farm efficiency, and that this positive effect was maintained after their replacement with decoupled income support.     

Modelling CAP Decoupling in the EU: A Comparison of Selected Simulation Models and Results

This article reviews ways of representing the effects of decoupling in the European Union (EU) on land allocation and production in eight selected simulation models (AGLINK, AG‐MEMOD, CAPRI, CAPSIM, ESIM, FAPRI, GOAL and GTAP). It then compares the simulated effects of decoupling and traces them back to the model specifications and parameter assumptions. In particular, roughage is not included in most models, so that changes in ruminant production are not necessarily consistent with the changes in fodder area. Models also differ in the extent to which they reflect the substitution possibilities in ruminant feeds. Notwithstanding the considerable differences in model types and specifications, all the studies considered here predict that as a result of decoupling, areas allocated to cereals (and silage maize) and beef and sheep production in the EU‐15 will decline, while fodder area will increase. Differences in the projections about pasture, oilseed and set‐aside areas can be attributed to different model or scenario specifications. The most important factor affecting the results is the extent to which the models assume that the Common Agricultural Policy (CAP) 2003 Reform (regarding Single Farm Payments) involves a substantial decoupling of support compared with the baseline (Agenda 2000) policy.     

Financial consequences of cross-compliance and flat-rate-per-ha subsidies: The case of olive farmers on sloping land

Under the past Common Agricultural Policy (CAP) olive oil subsidy regime, farmers were eligible for subsidies on the basis of amount of olive oil produced. This led to an intensification of production and negative environmental effects on sloping land, such as loss of biodiversity and more soil erosion. In 2004 the olive and olive oil regime changed, with integration of support to olive farmers in the Single Payment Scheme (SPS). From 2006 to 2013 farmers receive a constant amount of subsidies, based on the average amount they received in the 4-year reference period 1999–2002.     

Fostering integrated land and water management approaches: Evaluating the water footprint of a Mediterranean basin under different agricultural land use scenarios

In the Genil River Basin (southern Spain), agriculture is the greatest pressure on freshwater demand. Furthermore, water degradation caused by soil erosion is becoming a key environmental concern. This study aims to assess the water-related impacts of agriculture combining the use of an ecohydrological model (SWAT) with a spatiotemporal water footprint assessment to evaluate the current status of streamflow (blue water), soil water (green water) and the assimilability of sediments by streamflow (grey water footprint). The Common Agricultural Policy (CAP) requires farmers to adopt certain agricultural practices that are beneficial for the environment. Such practices could affect the conditions of available land and water resources. Because of the importance of applying the best land management practices for the maintenance of sustainable water resources, the study also infers probable water availability and water pollution level changes under different post-2013 CAP scenarios. The Genil streamflow is highly regulated, and, as a result, it is hard to discern significant changes (p < 0.05) under the proposed scenarios. However, there is a shift with afforestation measures from unproductive (i.e., direct soil evaporation) to productive water (i.e., evapotranspired water from agricultural and natural areas, excluding non-growing periods) consumption. The probability of annual evapotranspiration from natural areas being greater in afforestation scenarios than in the baseline scenario is 0.70 to 0.88, whereas the likelihood of soil water evaporation being lower is 0.60. Evapotranspiration in natural areas increases by about 521% from September to May under afforestation measures compared with the baseline scenario, whereas soil water evaporation decreases by 30% in winter. The grey water footprint and water pollution level decrease by 19% and 9%, respectively, with the highest streamflow conditions under afforestation as opposed to current conditions. However, water pollution levels of suspended solids greater than 1 indicate that the river flow is not capable of assimilating the existing sediment loads. Since land use changes and agricultural practices have a major impact on water resources, the post-2013 CAP reform can provide environmental benefits for water allocation and mitigation of water pollution. However, further efforts are required to better align the policy goals of the CAP and the Water Framework Directive.     

Natural Areas, the whole countryside approach and sustainable agriculture

Natural Areas are biogeographical zones which reflect the geological foundation, the natural systems and processes, and the wildlife in different parts of England, and provide a framework for setting objectives for nature conservation. This paper argues, with particular reference to agro-ecosystems, that there is a need for an integrated, whole countryside approach to Natural Areas based on the principles of ‘strong’ sustainable development. In practice, this means the delineation of conservation objectives for the whole of each Natural Area and the application of policy instruments designed to address the causes of environmental loss and deterioration. The latter requires, it is argued, a structural analysis of generic environmental issues. A generic issues approach is required in order to avoid the pitfalls of environmental ‘symptom management’ (environmental managerialism), an approach which dominates current environmental and agri-environmental policy. Necessary as such discrete action programmes and measures may be as short-term ‘fire-fighting’ responses to immediate threats, environmental managerialism as a policy framework epitomises a non-holistic and ‘disintegrated’ approach to nature conservation. The paper goes on to discuss the configuration of agri-environmental policy that will be required to address generic agricultural impacts on biodiversity and the constraints and opportunities for its implementation that are likely to arise within the context of further CAP reform and the forthcoming round of WTO negotiations.     

A real options model to assess the role of flexibility in forestry and agroforestry adoption and disadoption in the Lower Mississippi Alluvial Valley

Efforts to restore the Lower Mississippi Alluvial Valley's forests have not achieved desired levels of ecosystem services production. We examined how the variability of returns and the flexibility to change or postpone decisions (option value) affects the economic potential of forestry and agroforestry systems to keep private land in production while still providing ecosystem services. A real options analysis examined the impact of flexibility in decision making under agriculture, forestry, and agroforestry and demonstrated that adoption of forestry or agroforestry systems is less feasible than would be predicted by deterministic capital budgeting models.     

Translocality on the real estate market: A new extended approach

Growing levels of socio-economic development around the world have induced globalisation processes that generally diminish the role of local communities and local processes. However, the intensification of global processes has led to an unexpected turn towards locality. This process is referred to as glocalisation. Globalisation leads to the generalisation of locality (universalisation), and glocalisation processes localise globality (indigenisation). Globalisation and glocalisation are integrated through translocality which supports evaluations of the co-existence of both processes. This study proposes a general concept of translocality (TR) and a methodology for measuring translocality (MTR). In this approach, translocality reflects the degree of tension/adaptation between globalisation and glocalisation. The results of the study indicate that translocal processes on regional markets in Poland proceed gradually, and that they are accompanied by the emergence of convergence clubs of translocal regions and the progressing inter-regional stratification in translocality levels.     

The evolution of global farming land: facts and interpretations

Although land plays a crucially important role in economic development and structural transformation, the causes and consequences of the evolution of farming land have received scant attention in recent decades. In this article, I document global and regional changes in aggregate agricultural land use, per capita land use, and average farm sizes. The spatial distribution of global farming land has changed dramatically, with developed countries substantially reducing their share of global agricultural land, and land‐abundant developing countries substantially increasing their share. In per capita terms, we see a rather different pattern, with average farm sizes increasing in rich and more commercialized agricultural systems, and generally declining or staying constant in poorer and less commercialized systems. These outcomes are the result of complex processes that are not always well understood. I conclude the article by suggesting new, or neglected, areas of research that would facilitate a better understanding of these critically important developments.     

Economic and environmental effects of decoupled agricultural support in the EU

This article reports findings from a simulation model representing the European farming system disaggregated at different scales. This modeling experiment explores the effects of various decoupling options associated with the 2003 European agreement on gross margins, land use, shadow cost of land, and greenhouse gas emissions. Our results show increases in the farmers’ gross margins when decoupled support is maintained equal to the amount of direct aid previously attributed to agricultural production, assuming unchanged prices. Land used for pasture increases at the expense of land used for cereals and protein crops. The extent to which these effects materialize depends on the policy options selected by Member States when implementing the Luxembourg agreement. When they opt for some recoupling of support, adverse net economic impacts occur for producers. Regional differences in impacts are more pronounced than the analysis aggregated at European and national scales suggests. This highlights the need for further work based on geostatistical downscaling.     

The impact of agricultural policy on farm income concentration: the case of regional implementation of the CAP direct payments in Italy

One of the objectives of agricultural policy worldwide concerns the support of farm income. Common Agricultural Policy direct payments (DPs) are the main instruments to support farm income in the European Union. This article addresses their role in the concentration of farm income. This is done by calculating the Gini coefficient and its disaggregation in a large sample of Italian farms in the period between 2006 and 2007. Although this approach has been used to develop ex‐post analysis in previous studies, this article is innovative given that it is used here in an ex ante analysis aimed at evaluating the likely impact of a recent reform proposal. This latter requests changing the current model to a regional model of DPs application to make payment rates (i.e., payment per hectare) homogeneous among farms in the same region. The analysis shows that DPs and farm incomes are both very concentrated but that DPs allow for an income concentration reduction in Italian farms. The shift to a regional implementation reduces DPs concentration and, to a limited extent, farm income concentration. Of the considered regionalization scenarios, those that redistribute DPs among regions are the most effective in reducing concentration. The extension of the Gini considered approach to an ex ante setting seems effective because it provides insights that could feed the policy debate regarding the forthcoming reform.     

The Capitalisation of CAP Payments into Land Rental Prices: A Panel Sample Selection Approach

The empirical literature suggests that farmland prices and rents capitalise agricultural subsidies and that the 2003 reform of the EU Common Agricultural Policy, which decoupled subsidies from production and attached them to land, may have increased the extent of the phenomenon. Employing a farm‐level dataset, the Farm Accountancy Data Network (FADN) for Italy, we investigate this issue while accounting for selectivity, endogeneity and unobserved individual heterogeneity. To understand the impact of the reform we compare the estimates of capitalisation rate for decoupled payments with those for coupled payments. After correcting for unobserved individual heterogeneity and selectivity, our results reveal no capitalisation of coupled payments and only limited capitalisation of decoupled area payments into farmland rents in Italy.     

Hybridization of valuation procedures as a medicine supporting the real estate market and sustainable land use development during the covid-19 pandemic and afterwards

Currently we are facing the pandemic situation that occur all over the world. Regardless the country or even the region, the negative consequences that are expected could be very big and the level of crisis is not predictable. This situation is the challenge for the real estate market as well. Due to this fact, the authors believe that there is the time when deep transformation of approaches, procedures and awareness related to valuation domain becomes. Today, due to the fact of the global COVID-19 and pandemic restrictions is the best time to implement the automated models and advanced technological solutions to the valuation world.The authors proposed the hybrid approach that is the way to reconcile the participants on the property market. Hybrid approach is understanding as the synergy in combining aspects of new (automated solutions) and traditional components that are developed in the agile mode system creation. The proposed solutions can be treated as a cure for some symptoms of the real estate market infection but also as a vaccine, which should to a large extent prevent restrictions and nuisance in real estate valuation in case of repeated infection.     

Public support effect on natural disaster management: A case study of ice storms in forests in Slovenia

In the last decade Slovenia has experienced more frequent natural disasters in forests. The most severe and widespread one that affected Slovenian forests, which cover more than a half of Slovenian territory, was a large-scale ice storm in early February 2014. This study aims to investigate the effect of the public support on the recovery of forest farms affected by the 2014 ice storm. Analyses focus particularly on the ability of Slovenian forest farms’ income recovery in a short-time period. The economic resilience of forest farms in the absence of forest disaster payments due to the absence of legal certainty for disaster aid in 2014 and 2015 provides an interesting framework for identifying the income effect of Common Agricultural Policy (CAP) payments. The Farm Accountancy Data Network has been used with applied statistical and regression methods to estimate the public support effect on selected woodland area size samples. Results suggest a positive effect of CAP payments on farm income recovery. The magnitude of the effect is high and significant for the less favoured area and disaster payments that were given for farm production loss in the 2013 drought. Although the magnitude of the effect is weak, investment payments show a significant positive effect on farm income recovery for all studied forest farm samples.     

The heterogeneous farm‐level impact of the 2005 CAP‐first pillar reform: A multivalued treatment effect estimation

This article aims to evaluate the impact of the 2005 reform of the Common Agricultural Policy (CAP) on farm production choices as a treatment effect (TE). This impact is measured through alternative metrics of the short‐term changes of the output vector. The heterogeneity of the response to the reform is assessed by estimating both average and quantile TE. As this heterogeneous response may depend on the different farm‐level CAP support, a multivalued treatment approach is adopted and applied to treated units (i.e., supported farms). This approach is applied to a balanced panel of Italian FADN farms observed over years 2003–2007. Results show that the 2005 reform of the first pillar of the CAP actually had an impact in (re)orienting short‐term farm production choices but this response is largely heterogeneous and concentrated in the lower levels of support.     

Risk aversion and land allocation between annual and perennial crops in semisubsistence farming: a stochastic optimization approach

This article analyzes the effect of production uncertainty on farmland allocation decisions between perennial and annual crops, focusing on a representative farmer's attitude toward risk. A dynamic stochastic optimization model that considers net planting—the difference between new plantings and removals of perennial crops that achieve full production cycle—is used. The effect of uncertainty on the representative farmer's decisions to increase or decrease perennial crops’ acreage, on the optimal path, is examined. Our results reveal that the response of optimal path of net planting to uncertainty related to perennial crop production is highly affected by the farmer's attitude toward risk. A risk‐averse or a low‐risk loving farmer tends to reduce land allocation to perennial crops under uncertainty, while a high‐risk loving farmer will do exactly the opposite. Also, due to disutility of farming, the farmer tends to reduce land allocation to perennial crops when prices are high enough for him to attain a desired income level expectation. One implication of this research is the need for mechanization—in sub‐Saharan countries in particular—that increases per‐acreage yield and output in semisubsistence agriculture.     

A game theory approach to the analysis of land and property development processes

Land and property development processes obviously can be seen as a social situation in which the interaction of individuals or groups of individuals is one of the essential elements. To study and understand social situations, it is important to analyse how the decisions of actors are interrelated and how those decisions result in outcomes. In this paper, we propose a game theoretical modelling approach to analyse it. Hence, the objective of the paper is to investigate the usefulness as well as the limitations of game theoretical modelling for analysing and predicting the behaviour of actors in decision-making processes with respect to the development of land and property. For that purpose, we have developed game models for the case study of the development of a greenfield residential location in the Netherlands with respect to the implementation of new Dutch legislation on cost recovery.     

The Role of the Common Agricultural Policy in Enhancing Farm Income: A Dynamic Panel Analysis Accounting for Farm Size in Italy

As a multi-objective policy, the EU Common Agricultural Policy continues to secure significant income support for farmers as one of the nine specific objectives. We estimate the income transfer efficiency of a broad set of pivotal policy measures, focusing on the effects of farm structure on income transfer efficiency. We use dynamic modelling, based on a micro-data panel of Italian farms for the period 2008–2014, allowing for endogeneity, simultaneity bias, and omitted variables. In line with previous studies and economic expectations, we find that decoupled direct payments provide the highest contribution to agricultural incomes, followed by agri-environmental payments and on-farm investment subsidies. Coupled payments have no significant impacts on farmers’ income. Generally, for all analysed Common Agricultural Policy measures, large farms benefit from greater transfer efficiency levels compared with medium and small farms. These differences among instruments and across farms suggest that policy-participation costs may play a pivotal role, together with the economic structure of farms, in determining the income transfer efficiency of CAP policies.