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Phasing Out Of Environmentally Harmful Subsidies: Effects Of The Cap 2003 Reform

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  • Hofreither, Markus F.
  • Schmid, Erwin
  • Sinabell, Franz

Abstract

A core element of the recent Common Agricultural Policy reform is to decouple payments that are merely linked to production from 2005 on. These subsidies are classified as environmentally harmful by OECD. An agricultural sector model, using a modified version of the positive mathematical programming method, depicts the political, natural, and structural complexity of Austrian farming. Environmental effects of indicators that are linked to production and management measures are estimated. Simulation results show that the recent CAP reform will not only reduce the cost of production, but also improve the environmental condition of natural resources.

Suggested Citation

  • Hofreither, Markus F. & Schmid, Erwin & Sinabell, Franz, 2004. "Phasing Out Of Environmentally Harmful Subsidies: Effects Of The Cap 2003 Reform," 2004 Annual meeting, August 1-4, Denver, CO 20169, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea04:20169
    DOI: 10.22004/ag.econ.20169
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    References listed on IDEAS

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    1. Onal, Hayri & McCarl, Bruce A, 1989. "Aggregation of Heterogeneous Firms in Mathematical Programming Models," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 16(4), pages 499-513.
    2. Hayri Önal & Bruce A. McCarl, 1991. "Exact Aggregation in Mathematical Programming Sector Models," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 39(2), pages 319-334, July.
    3. Wier, Mette & Andersen, Johnny M. & Jensen, Jorgen D. & Jensen, Thomas C., 2002. "The EU's Agenda 2000 reform for the agricultural sector: environmental and economic effects in Denmark," Ecological Economics, Elsevier, vol. 41(2), pages 345-359, May.
    4. Richard E. Howitt, 1995. "Positive Mathematical Programming," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(2), pages 329-342.
    5. Franz Sinabell & Erwin Schmid, 2003. "The Reform of the Common Agricultural Policy. Consequences for the Austrian Agricultural Sector," Austrian Economic Quarterly, WIFO, vol. 8(3), pages 84-101, August.
    6. Franz Sinabell & Erwin Schmid, 2003. "Die Reform der Gemeinsamen Agrarpolitik der EU. Wichtige Konsequenzen für Österreichs Landwirtschaft," WIFO Monatsberichte (monthly reports), WIFO, vol. 76(6), pages 425-440, June.
    7. van Beers, Cees & van den Bergh, Jeroen C. J. M., 2001. "Perseverance of perverse subsidies and their impact on trade and environment," Ecological Economics, Elsevier, vol. 36(3), pages 475-486, March.
    8. Donna J. Lee & Richard E. Howitt, 1996. "Modeling Regional Agricultural Production and Salinity Control Alternatives for Water Quality Policy Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(1), pages 41-53.
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    Cited by:

    1. Tilmann Rave & Michael Thöne & Christian Bergs & Lars Koch, 2010. "Umweltbezogenes Subventionscontrolling," ifo Forschungsberichte, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 49.

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