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Modeling The Rural-Urban Effects Of Changes In Agricultural Policies: A Bi-Regional Cge Analysis Of Two Case Study Regions

  • Balamou, Eudokia
  • Pouliaikas, Kostas
  • Roberts, Deborah
  • Psaltopoulos, Demetrios

The paper uses bi-regional CGE models to analyse the effects of a change in agricultural support on two (very different) case study regions, one within Scotland, the other in Greece. Both regions are predominantly rural in nature but contain an urban centre as well as a rural hinterland. The results show qualitative and quantitative differences in the total effects in both regions as well as differences in the distribution of effects between their rural and urban parts. In particular, the negative effects of a reduction in price support are contained within rural primary sectors in the Scottish region: nonfarm rural sectors and urban sectors all benefit from the policy shock. In contrast, the negative impacts of a reduction in price support are more widely spread in the Greek region, with losers in both the urban and rural areas. These result are attributed to the stronger links between agriculture and first stage processing sectors in the Greek study area and also the ownership of agricultural factors by urban residents. Full decoupling at the regional level is shown to have negative aggregate effects in both study regions, driven by the high import intensity of household commodities. Again however there are gainers as well as losers from the policy shock suggesting a case for spatially and sectorally targeted support to alleviate the potentially negative effects of CAP reform at a regional level.

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File URL: http://purl.umn.edu/6651
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Paper provided by European Association of Agricultural Economists in its series 107th Seminar, January 30-February 1, 2008, Sevilla, Spain with number 6651.

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Date of creation: 2008
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Handle: RePEc:ags:eaa107:6651
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  1. Yves Léon, 2005. "Rural development in Europe: a research frontier for agricultural economists," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 32(3), pages 301-317, September.
  2. Robinson, Sherman & Cattaneo, Andrea & El-Said, Moataz, 2000. "Updating and estimating a Social Accounting Matrix using cross entropy methods," TMD discussion papers 58, International Food Policy Research Institute (IFPRI).
  3. Demetrios Psaltopoulos & Eudokia Balamou & Kenneth J. Thomson, 2006. "Rural-Urban Impacts of CAP Measures in Greece: An Inter-regional SAM Approach," Journal of Agricultural Economics, Wiley Blackwell, vol. 57(3), pages 441-458.
  4. Kilkenny, Maureen, 1993. "Rural vs. Urban Effects of Terminating Farm Subsidies," Staff General Research Papers 11121, Iowa State University, Department of Economics.
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