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A framework for assessing the economic consequences of the support for Less Favoured Areas within Pillar II of Common Agricultural Policy in a multi-regional CGE setting, with an application to Poland

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  • James Giesecke

    ()

  • Mark Horridge
  • Katarzyna Zawalinska

    ()

Abstract

The Common Agricultural Policy (CAP) is one of the most complex and also the most costly of all EU policies. It comprises over 40 financing streams, including Pillar I and Pillar II measures which are highly regulated. In the case of Poland, these are directed to all 16 NUTS2 regions. We are modelling here the regional and thus national consequences of the CAP's most costly Pillar II measure in Poland, so called Less Favoured Areas support (LFA). It is complex, when we recognise the multipurpose of this measure and significant amount of funds directed at a large number of regions. To handle the regional complexity of this problem, we require a multi-regional model. Such a model must be detailed in its disaggregation of industries, commodities and households if it is to be capable of reflecting the complexity of this measure. As such, we use a large-scale multi-regional CGE model. The model is tailored to reflect the complexity of the rural development policy (Pillar II), of which LFA is the largest part in Poland. Of the 82 region-specific sectors in the model, over 20 is related to agricultural production. The model distinguishes rural and urban households in each region and is based on the most recent IO tables of 2005. We propose a framework for mapping the individual financing stream of the LFA to the specific structural variables relating to specific type of land (LFA and nonLFA) in each region. As to our best knowledge such an approach was never conducted before with respect not only of LFA but also Pillar II measures in general.

Suggested Citation

  • James Giesecke & Mark Horridge & Katarzyna Zawalinska, 2011. "A framework for assessing the economic consequences of the support for Less Favoured Areas within Pillar II of Common Agricultural Policy in a multi-regional CGE setting, with an application to Poland," ERSA conference papers ersa10p872, European Regional Science Association.
  • Handle: RePEc:wiw:wiwrsa:ersa10p872
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    References listed on IDEAS

    as
    1. Mark Horridge & Glyn Wittwer, 2007. "The economic impacts of a construction project, using SinoTERM, a multi-regional CGE model of China," Centre of Policy Studies/IMPACT Centre Working Papers g-164, Victoria University, Centre of Policy Studies/IMPACT Centre.
    2. Joaquim Bento de Souza Ferreira Filho & Carliton Vieira dos Santos & Sandra Maria do Prado Lima, 2007. "Tax Reform, Income Distribution and Poverty in Brazil: an Applied General Equilibrium Analysis," Working Papers MPIA 2007-26, PEP-MPIA.
    3. Glyn Wittwer, 2009. "The Economic Impacts of a New Dam in South-East Queensland," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 42(1), pages 12-23, March.
    4. Zawalinska, Katarzyna, 2009. "Evaluation of rural development programs after Poland’s accession to the EU: regional CGE approach," 2009 Conference, August 16-22, 2009, Beijing, China 51342, International Association of Agricultural Economists.
    5. Naqvi, Farzana & Peter, Matthew W, 1996. "A Multiregional, Multisectoral Model of the Australian Economy with an Illustrative Application," Australian Economic Papers, Wiley Blackwell, vol. 35(66), pages 94-113, June.
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