Decoupled Payments and the Localization of Activities
AbstractThis article considers the impacts of (de)coupled farm sector support on the locations of farming and agro-industrial activity. An economic geography model is developed which has two types of regions, one with extensive agricultural production (rural), the other with intensive farming that is more densely populated (urban). The farm and agro-industrial sectors are vertically linked. A service sector that is not directly linked to either basic industry is also explicit. We show that coupled and decoupled subsidies affect the spatial distribution of farming, industry, and service sector activity. Support that is provided to all farmers regardless of crop, thus semi-decoupled, increases spatial agglomeration. Support targeted to farmers of particular crops, especially rural comparative advantage crops, favors increased farming in rural areas but spatial agglomeration of non-farm activity still occurs. This latter targeting approach is used in the European Union.
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Bibliographic InfoPaper provided by European Association of Agricultural Economists in its series 2002 International Congress, August 28-31, 2002, Zaragoza, Spain with number 24942.
Date of creation: 2002
Date of revision:
location; agriculture; economic geography; decoupling; Agricultural Finance; R12; R58; Q18;
Find related papers by JEL classification:
- R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
- R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy
- Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
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