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The Impact of the 2013 CAP Reform on the Decoupled Payments’ Capitalisation into Land Values

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  • Pavel Ciaian
  • d'Artis Kancs
  • Maria Espinosa

Abstract

We assess the effects of the 2013 CAP reform on the capitalisation of decoupled payments in land rental values. Our estimates suggest that the reform leads to an increase in the capitalisation of decoupled payments by an additional 18 cents for each Euro of decoupled payments relative to the pre†reform situation. However, there is an important variation in the reform effects between Member States (MS) particularly between Old Member States (OMS) and New MS (NMS). In NMS, the capitalisation rate slightly reduces from 83% in the pre†reform period to 79% in the post†reform period. Although, the rate is significantly lower in OMS, it doubles (from 21% to 43%) due to the reform. The main sources of the post†reform capitalisation in the European Union (EU) are the pre†reform capitalisation accounting for 69% of the total post†reform capitalisation, followed by the entitlement stock change with 19%, by the internal convergence of payments with 18%, the budget change (including external convergence) with 1%, and the differentiation of payments (redistributive payment) with −7%. Overall, our estimates suggest that on average in the EU, the non†farming landowners’ policy gains are 27% of the total decoupled payments in the post†reform period compared to 18% in the pre†reform period.

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  • Pavel Ciaian & d'Artis Kancs & Maria Espinosa, 2018. "The Impact of the 2013 CAP Reform on the Decoupled Payments’ Capitalisation into Land Values," Journal of Agricultural Economics, Wiley Blackwell, vol. 69(2), pages 306-337, June.
  • Handle: RePEc:bla:jageco:v:69:y:2018:i:2:p:306-337
    DOI: 10.1111/1477-9552.12253
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    1. Pavel Ciaian & Edoardo Baldoni & d'Artis Kancs & Dusan Drabik, 2020. "The Capitalization of Agricultural Subsidies into Land Prices," EERI Research Paper Series EERI RP 2020/09, Economics and Econometrics Research Institute (EERI), Brussels.
    2. Laurence Delattre & Marta Debolini & Jean Christophe Paoli & Claude Napoleone & Michel Moulery & Lara Leonelli & Pierre Santucci, 2020. "Understanding the Relationships between Extensive Livestock Systems, Land-Cover Changes, and CAP Support in Less-Favored Mediterranean Areas," Land, MDPI, Open Access Journal, vol. 9(12), pages 1-20, December.
    3. Artiom Volkov & Tomas Balezentis & Mangirdas Morkunas & Dalia Streimikiene, 2019. "In a Search for Equity: Do Direct Payments under the Common Agricultural Policy Induce Convergence in the European Union?," Sustainability, MDPI, Open Access Journal, vol. 11(12), pages 1-15, June.
    4. Pavel Ciaian & d'Artis Kancs & Dusan Drabik, 2016. "Land Markets in Europe: Institutions and Market Outcomes," EERI Research Paper Series EERI RP 2016/10, Economics and Econometrics Research Institute (EERI), Brussels.
    5. Ciaian, Pavel & Espinosa, Maria & Louhichi, Kamel & Perni, Angel & Gomez y Paloma, Sergio, 2018. "Farm level impacts of abolishing the CAP direct payments: An assessment using the IFM-CAP model," 162nd Seminar, April 26-27, 2018, Budapest, Hungary 272087, European Association of Agricultural Economists.
    6. Garrone, Maria & Emmers, Dorien & Olper, Alessandro & Swinnen, Johan, 2019. "Jobs and agricultural policy: Impact of the common agricultural policy on EU agricultural employment," Food Policy, Elsevier, vol. 87(C), pages 1-1.
    7. Laurence Delattre & Marta Debolini & Jean Paoli & Claude Napoleone & Michel Moulery & Lara Leonelli & Pierre Santucci, 2020. "Understanding the Relationships between Extensive Livestock Systems, Land-Cover Changes, and CAP Support in Less-Favored Mediterranean Areas," Post-Print hal-03064829, HAL.
    8. Dominik Noll & Christian Lauk & Veronika Gaube & Dominik Wiedenhofer, 2020. "Caught in a Deadlock: Small Ruminant Farming on the Greek Island of Samothrace. The Importance of Regional Contexts for Effective EU Agricultural Policies," Sustainability, MDPI, Open Access Journal, vol. 12(3), pages 1-19, January.
    9. Ivan Takáč & Jarmila Lazíková & Ľubica Rumanovská & Anna Bandlerová & Zuzana Lazíková, 2020. "The Factors Affecting Farmland Rental Prices in Slovakia," Land, MDPI, Open Access Journal, vol. 9(3), pages 1-18, March.
    10. Eder, Andreas & Salhofer, Klaus & Scheichel, Eva, 2021. "Land tenure, soil conservation, and farm performance: An eco-efficiency analysis of Austrian crop farms," Ecological Economics, Elsevier, vol. 180(C).
    11. Jason Loughrey & Trevor Donnellan & Kevin Hanrahan, 2020. "The Agricultural Land Market in the EU and the Case for Better Data Provision," EuroChoices, The Agricultural Economics Society, vol. 19(1), pages 41-47, April.
    12. Xin, Liangjie & Li, Xiubin, 2019. "Rental rates of grain land for consolidated plots and their determinants in present-day China," Land Use Policy, Elsevier, vol. 86(C), pages 421-426.
    13. Ciliberti, Stefano & Frascarelli, Angelo, 2018. "Does the basic payment efficiently enhance farm incomes? Evidences from Italy," 162nd Seminar, April 26-27, 2018, Budapest, Hungary 271957, European Association of Agricultural Economists.
    14. Stefano Ciliberti & Angelo Frascarelli, 2018. "The CAP 2013 reform of direct payments: redistributive effects and impacts on farm income concentration in Italy," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 6(1), pages 1-18, December.

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    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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