In this paper we evaluate empirically the absolute and relative size of risk-related effects of a farm policy change, with specific reference to the CAP arable crop regime. We adopt a dual framework under non linear mean-variance risk preferences, which incorporates the impact of price uncertainty in the specific decision-making structure of EU arable crop producers. A system of output supply, input demand and land allocation equations has been estimated on a sample of Italian specialised arable crop farms, which allows us to derive elasticities with respect to all the relevant exogenous variables, including those related to risk. The simulation of the impact of an Agenda 2000-type of shock confirms that the size of risk effects is important in evaluating farmer's output responses. This may have important implications for the revision of Â"green boxÂ" criteria in the context of the current WTO negotiations. Keywords: Risk effects; Common Agricultural Policy; Decoupling; Duality.
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Paper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2002 Annual meeting, July 28-31, Long Beach, CA with number
19860.
Length: Date of creation: 2002 Date of revision: Handle: RePEc:ags:aaea02:19860
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