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Calculating the 'greening' effect: A case study approach to predict the gross margin losses in different farm types in Germany due to the reform of the CAP

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  • Heinrich, Barbara

Abstract

Agricultural policy is designed to achieve certain goals. One goal that is of increasing importance in public discussion is 'public money for public goods' i.e. the compensation for the provision of public goods and the internalization of externalities. The European Union's Common Agricultural Policy is currently undergoing a reform process which inter alia aims to achieve a higher environmental standard in agricultural production by binding direct payments to practices beneficial for the climate and the environment (the so-called 'greening'). I simulate how farms would respond to these measures using a case study farm modeling approach and data for different farm types in Germany. I find that the considered and currently envisaged 'greening' measures can be expected to function in general due to the linkage to the direct payments, which provide a strong disincentive to forego participation. The individual economic outcome strongly depends on the current intensity of the farm in question and on the implementation details of the introduced measures. However, farms with very high gross margins per hectare will forego the support scheme.

Suggested Citation

  • Heinrich, Barbara, 2012. "Calculating the 'greening' effect: A case study approach to predict the gross margin losses in different farm types in Germany due to the reform of the CAP," DARE Discussion Papers 1205, Georg-August University of Göttingen, Department of Agricultural Economics and Rural Development (DARE).
  • Handle: RePEc:zbw:daredp:1205
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    1. Dana L. Hoag & William E. Foster & Bruce A. Babcock, 1993. "Field-Level Measurement of Land Productivity and Program Slippage," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(1), pages 181-189.
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    Cited by:

    1. Louhichi, Kamel & Ciaian, Pavel & Espinosa, Maria & Colen, Liesbeth & Perni, Angel & Paloma, Sergio, 2015. "The Impact of Crop Diversification Measure: EU-wide Evidence Based on IFM-CAP Model," 2015 Conference, August 9-14, 2015, Milan, Italy 211542, International Association of Agricultural Economists.
    2. Francesco Diotallevi & Emanuele Blasi & Silvio Franco, 2015. "Greening as compensation to production of environmental public goods: how do common rules have an influence at local level? The case of durum wheat in Italy," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 3(1), pages 1-14, December.
    3. Gava, Oriana & Andreoli, Maria & Bartolini, Fabio & Brunori, Gianluca, 2015. "CAP post-2013: alternative greening designs in Tuscany (Italy)," 2015 Fourth Congress, June 11-12, 2015, Ancona, Italy 207359, Italian Association of Agricultural and Applied Economics (AIEAA).
    4. Louhichi, Kamel & Ciaian, Pavel & Espinosa, Maria & Colen, Liesbeth & Perni, Angel & Gomez y Paloma, Sergio, 2015. "Farm-level economic impacts of EU-CAP greening measures," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205309, Agricultural and Applied Economics Association.
    5. repec:spr:agfoec:v:3:y:2015:i:1:p:1-14 is not listed on IDEAS
    6. Louhichi, Kamel & Ciaian, Pavel & Espinosa, Maria & Colen, Liesbeth & Perni, Angel & Gomez y Paloma, Sergio, 2015. "EU-wide individual Farm Model for CAP Analysis (IFM-CAP): Application to Crop Diversification Policy," 2015 Conference, August 9-14, 2015, Milan, Italy 212155, International Association of Agricultural Economists.
    7. Schulte, Michael Clemens & Theuvsen, Ludwig & Wiese, Armin & Steinmann, Horst-Henning, 2016. "Die Ökonomische Bewertung Von Glyphosat Im Deutschen Ackerbau," 56th Annual Conference, Bonn, Germany, September 28-30, 2016 244761, German Association of Agricultural Economists (GEWISOLA).
    8. Solazzo, Roberto & Pierangeli, Fabio, 2016. "How does greening affect farm behaviour? Trade-off between commitments and sanctions in the Northern Italy," Agricultural Systems, Elsevier, vol. 149(C), pages 88-98.

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    Keywords

    greening; Common Agricultural Policy; reform of the CAP; agri-environmental measures; direct payments;

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