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The Impact of the 2013 CAP Reform on the Decoupled Payments' Capitalization into Land Values

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  • Pavel Ciaian
  • d'Artis Kancs
  • Maria Espinosa

Abstract

Decoupled direct payments were introduced in the European Union (EU) by the 2003 CAP reform in form of the Single Payment Scheme (SPS) and the Single Area Payment System (SAPS). The 2013 CAP reform changed both the implementation of decoupled payments as well as its budget. We assess the possible effects of the 2013 CAP reform on the capitalization of decoupled payments in land rental values. Our estimates suggest that the CAP reform leads to an increase in the capitalization of decoupled payments by additional 16 cents for each EUR of decoupled payments relative to the pre-reform situation. However, there is a relatively large variation in the reform effects between MS particularly between Old Member States (OMS) and New MS (NMS). In NMS the capitalization rate slightly reduces from 76% in the pre-reform period to 72% in the post-reform period. Although, the rate is significantly lower in OMS, it almost doubles (from 20% to 39%) due to the reform. The main source of the post-reform capitalization in the EU are the entitlement stock changes accounting for 19% of total post-reform capitalization level, followed 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 25% of total decoupled payments in the post-reform period compared to 17% in the pre-reform period.

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  • Pavel Ciaian & d'Artis Kancs & Maria Espinosa, 2016. "The Impact of the 2013 CAP Reform on the Decoupled Payments' Capitalization into Land Values," EERI Research Paper Series EERI RP 2016/04, Economics and Econometrics Research Institute (EERI), Brussels.
  • Handle: RePEc:eei:rpaper:eeri_rp_2016_04
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    4. 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).
    5. 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.
    6. 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.
    7. 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.
    8. 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.
    9. 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.
    10. 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.
    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. 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.
    13. 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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    More about this item

    Keywords

    Capitalization; Decoupled subsidies; CAP reform; Land market; Land prices; Land rents; EU.;
    All these keywords.

    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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