WP3.3 Model development and adaptation RD Modelling and model link

Transcription

1 Common Agricultural Policy Regionalised Impact The Rural Development Dimension Collaborative project - Small to medium-scale focused research project under the Seventh Framework Programme Project No.: WP3.3 Model development and adaptation RD Modelling and model link 1

2 Deliverable: D3.1.2 Report on modeling RD measures in CAPRI W Britz 1, H.P Witzke 2 1- UBO 2

3 Contents 1. INTRODUCTION 4 2. ACTIVITY RELATED RD MEASURES LFA PAYMENTS NATURA 2000 PAYMENTS AGRI-ENVIRONMENTAL MEASURES 5 3. OTHER RD MEASURES 5 4. CONCLUSION 6 3

4 1. Introduction CAPRI-RD aims at an improvement of current options of CAPRI to address RD measures at several levels. The establishment of a structured database for RD measures currently funded under Pillar II is a precondition for quantitative analysis across Europe. This is handled under WP 2.1. The structure needs to be tailored to the subsequent modelling efforts. RD measures cover a wide spectrum of measures that range from LFA payments to rural tourism, village renewal or early retirement. As many of those are clearly beyond the scope of the partial equilibrium model CAPRI WP 3.2 allows for the development of a system of regional CGEs at the NUTS2 level to ensure complete coverage of RD policies and impacts. An important subset of RD measures (LFA and Natura2000 payments, agri-environmental measures) is directly ing certain agricultural activities and thus fall into the class of measures that CAPRI is designed for. A fairly disaggregated set of activities, an endogenous representation of production intensity and the farm type layer are all assets may be exploited. Finally the disaggregated set of model results, greatly enhanced by the spatial downscaling option may be used in WP 5 to provide indicators for impact assessment according to the CMEF This report focuses on the second and third bullets from above and reviews the current status of RD modelling in CAPRI together with a description of the current interpretation of RD measures in economic terms that will be refined in the project s lifetime. 2. Activity related RD measures The common denominator of RD measures under this heading is that they may be represented as to particular production activities in the CAPRI core model, possibly with some influence on coefficients LFA payments These are currently implemented as a payment per ha, separate for arable land and grassland, and specified using the known LFA shares of arable land /grassland in the NUTS2 regions. As they are distributed to all crop activities of a certain type their allocative impact is assumed to be minimal, 4

5 mainly influencing the total land use in the region. In fact there are some minimal eligibility conditions but the general assessment is that basically all farmers in a LFA region are also eligible (IEEP report) Natura 2000 payments Implemented as a payment per ha to the extensive technology of all agricultural crop activities. The payment per ha may be calculated separate for arable land and grassland, using the using the known N2K shares for these land use types. The direct allocative impact (intervention logic) is assumed to be for extensification Agri-environmental measures Agri-environmental measures are one of the most heterogeneous measures among all RD measures. They may be LFA like with minimal constraints for farmers or very specific, requiring establishment of buffer strips, hedges and low intensity farming. At the moments these differences are ignored for lack of data on appropriately classified categories. Instead the current implementation treats them as differentiated subsidies to particular activities. The payment amounts are distributed using FADN information on the agri-environmental payments received by certain farm types that may be related to the CAPRI activities. So if dairy farmers received a higher amount of payments than pig and poultry farmers, this is interpreted as to dairy farming relative to pork or poultry meat production. In addition the distribution uses the information on the shares of each farm type being located in or out of LFAs. However the extensive technology variant of each activity receives a higher premium (50% above average) compared to the intensive variant (50% below average). The same logic is currently applied to differentiate for dairy cows, bulls and heifers for fattening. Whereas low yielding cows might be indeed typically found in more extensive production system relying on fodder and less on concentrates, the logic is somewhat questionable for bulls and heifers differentiated by the final weight. The differentiation was introduced in CAPRI to allow some flexibility in beef output, and not to reflect production intensity. Indeed, the current feed distribution might assign higher concentrate shares to animals with low final weights. It needs to be discussed if a further differentiation in fattening activities needs to be introduced, or the farm typology adjusted in that respect. 3. Other RD measures All other RD measures have only indirect impacts on the CAPRI core model, via the link to the regional CGEs for the following information: 5

6 Consumer expenditure, aggregated to the national level, Price indices for labour, capital and intermediate inputs Productivity changes, partly as a result of RD measures The key ideas of this linkage are covered in deliverable as well as the Ruralia proposal for a classification of RD measures in terms of their economic interpretation in the CGE model. This classification has been discussed and is currently reviewed in the light of available knowledge on the typical implementation of these measures (CCCR report). It is reproduced in the Annex to this deliverable. 4. Conclusion The current implementation provides a solid fall back modelling solution for the implementation of RD measures. However, it will benefit from a review of this implementation through the policy experts in the consortium (CCCR and IEEP) that might lead to a better fitting implementation. The critical limitation will always be the available data. Even though we know that agri-environmental measures are different from subsidies to particular (CAPRI) activities we cannot improve on the existing solution without the help of additional data, though potentially of a quite indirect type. 6

7 5. Annex: Proposed implementation of RD models classified according to type and characteristic Implementation plan for RD measures (compare Del 3.2.1, pp 7-8) EAFRD code augmented EAFRD code (based on Table A1 in D2.1.1) Group subsidy in Agric Human Capital as above as above Compensatory aid subsidy in Human Capital beyond agriculture Measure names Main beneficiary sector (delivering commodities) see the list of sectors at the bottom of this table Assumptions on eff effect (0 to 10 Factor bias points) by (labour, capital, sector [primary input augmenting 0 P = 0% rate of return, 1 P = 5% rate of return, P = 50% rate of return land) labour bias (for example) gives an above average increase in labour at given factor use. No entry means Capital Labour subsidy [- subsidy [- delcaptaxra dellabtaxra TE(IND, TE(IND, capital use in sector (also increases sector output) Vocational Training 100% Education sector (M00) + Productivity shock 2% in Agriculture Labour type of shock Use of advisory services (2004 Art 33) as above as above as above Setting up farm relief and farm management services (Art 33) as above as above as above Education sector gets capital subsidy by REG Provision of farm advisory and extension services in BG, RO as above as above as above 50%Education (M00) + 50% Other services (O00) Productivity shock 2% in (M00+O00) Labour type of shock M00 and O00 get capital subsidies by REG Training and information Management of local integrated strategies (2004 Art 33) as above as above as above as above as above Leader inter-territorial co-operation as above as above as above as above Leader national networks as above as above as above as above Leader transnational co-operation as above as above as above as above Leader LAG running costs as above as above as above as above Leader management of local as above as above as above as above Leader promotion as above as above as above as above Leader research as above as above as above as above Leader assistance as above as above as above as above Leader evaluation as above as above as above as above Evaluation as above as above as above as above Technical assistance as above as above as above NA #N/A Financial engineering (Art 33) as above as above as above Options/proposals for implementation Exogenous shock [xinv(com, only increase of labour use in sectoral sector (also demand, for increases sector output effect output) see TFP points delprdtaxra increases sectoral output input use, but unspecific) Land subsidy, [- land use in sector sector ourput) Nominal factor income [wfacinc ( just income effect, potentially TFP points delinvtaxrat E ( increase of regional unspecific for sectors Subsidy to use less variable inputs in agriculture various options in CAPRI, none in CGE 7

8 Implementation plan for RD measures (compare Del 3.2.1, pp 7-8) EAFRD code augmented EAFRD code (based on Table A1 in D2.1.1) Group Measure names Main beneficiary sector (delivering commodities) Assumptions on eff effect (0 to 10 points) by sector [primary input augmenting change, aprim(ind, Factor bias (labour, capital, land) Capital Labour subsidy [- subsidy [- delcaptaxra dellabtaxra TE(IND, TE(IND, Options/proposals for implementation Exogenous shock [xinv(com, delprdtaxra Land subsidy, [- Nominal factor income [wfacinc ( delinvtaxrat E ( Subsidy to use less variable inputs in agriculture see the list of sectors at the bottom of this table 0 P = 0% rate of return, 1 P = 5% rate of return, P = 50% rate of return labour bias (for example) gives an above average increase in labour at given factor use. No entry means a neutral TFP increase. capital use in sector (also increases sector output) only increase of labour use in sectoral sector (also demand, for increases sector output effect output) see TFP points increases sectoral output input use, but unspecific) land use in sector sector ourput) just income effect, potentially TFP points increase of regional unspecific for sectors various options in CAPRI, none in CGE Subsidy in agricultural Phisical Capital Setting up of young farmers 50% Constr (F000) + 50% Machinery (DZ00) Productivty shock 5% in Agriculture type shock in F000+DZ as above s in agricultural holdings as above as above as above as above Agricultural water resources management (Art 33) 100% construction (F000) Productivity shock 10% in Agriculture Land type of shock as above Reparcelling (Art 33) as above as above as above as above Agricultural infrastructure (Art 33) as above as above as above as above Land improvement (Art 33) as above as above as above as above Basic infrastructure (SAPARD only): for agriculture and forestry as above as above as above 50% Constr as above Restoring and preventing natural disasters (Art 33) (F000) + 50% Machinery (DZ00) Productivty shock 5% in Agriculture type shock in F000+DZ as above Semi-subsistence farming (IFDR only) as above as above as above as above Leader s in agricultural holdings as above as above as above as above Meeting standards (2004 Art 33) 100% construction (F000) Inv subsidy in constr. by REG Inv subsidy in constr. by REG 8

9 Implementation plan for RD measures (compare Del 3.2.1, pp 7-8) EAFRD code augmented EAFRD code (based on Table A1 in D2.1.1) Group Measure names Main beneficiary sector (delivering commodities) Assumptions on eff effect (0 to 10 points) by sector [primary input augmenting change, aprim(ind, Factor bias (labour, capital, land) Capital Labour subsidy [- subsidy [- delcaptaxra dellabtaxra TE(IND, TE(IND, Options/proposals for implementation Exogenous shock [xinv(com, delprdtaxra Land subsidy, [- Nominal factor income [wfacinc ( delinvtaxrat E ( Subsidy to use less variable inputs in agriculture subsidy in PC as above as above see the list of sectors at the bottom of this table Forestry other measures: Improvement of the econ value of forests 100%AA02 0 P = 0% rate of return, 1 P = 5% rate of return, P = 50% rate of return labour bias (for example) gives an above average increase in labour at given factor use. No entry means a neutral TFP increase. capital use in sector (also increases sector output) only increase of labour use in sectoral sector (also demand, for increases sector output effect output) see TFP points shock in AA02+DZ00 in food processing Improving processing and marketing of agricultural products 100%DA00 Marketing of quality agricultural products (Art 33) as above as above increases sectoral output input use, but unspecific) land use in sector sector ourput) just income effect, potentially TFP points increase of regional unspecific for sectors various options in CAPRI, none in CGE as above as above Forestry other measures: Adding value to agric and forestry products as above as above Cooperation for development of new products as above as above as above Quality food schemes (2004 Art 33) as above as above subsidy in HC Information and promotion for food quality schemes 100% M00 10% increase type in education on quality Direct transfer Producer groups (IFDR only) Income in subsidy in Leader marketing of quality education on HC agricultural products 100% M00 quality Leader processing and marketing as above aid as above as above 1% of Early retirement (pre-2000 labour and land Direct transfer contracts) Income increase as above Income Income Early retirement (post-2000 contracts) as above as as above 9

10 Implementation plan for RD measures (compare Del 3.2.1, pp 7-8) EAFRD code augmented EAFRD code (based on Table A1 in D2.1.1) Group Measure names Main beneficiary sector (delivering commodities) Assumptions on eff effect (0 to 10 points) by sector [primary input augmenting change, aprim(ind, Factor bias (labour, capital, land) Capital Labour subsidy [- subsidy [- delcaptaxra dellabtaxra TE(IND, TE(IND, Options/proposals for implementation Exogenous shock [xinv(com, delprdtaxra Land subsidy, [- Nominal factor income [wfacinc ( delinvtaxrat E ( Subsidy to use less variable inputs in agriculture Compensatory aid see the list of sectors at the bottom of this table 0 P = 0% rate of return, 1 P = 5% rate of return, P = 50% rate of return labour bias (for example) gives an above average increase in labour at given factor use. No entry means a neutral TFP increase. capital use in sector (also increases sector output) only increase of labour use in sectoral sector (also demand, for increases sector output effect output) see TFP points increases sectoral output input use, but unspecific) land use in sector sector ourput) LFAs and areas subject to env. constraints: mountain areas 100%AA01 Land subsidy just income effect, potentially TFP points increase of regional unspecific for sectors various options in CAPRI, none in CGE extensification effects from eligibility criteria unclear (see IEEP report on LFAs) as above LFAs and areas subject to env. constraints: handicapped other areas as above as above as above as above as above LFAs and areas subject to env constraints: Natura 2000 areas as above as above Any empirical info on size of extensification effects? any disaggregation possible? Any MS particularities? Any consequences for animal production (=> not only TE)? Agri-environment payments (post contracts) 100%AA01 as above Agri-environment payments (pre contracts) as above as above see Environmental protection and animal welfare (Art 33): Animal welfare 100%AA01 Land subsidy Compensatory aid Environmental protection and animal subsidy in welfare (Art 33): Non-productive PC as above as above subsidy in Leader environmental protection HC and animal welfare as above as above subsidy in HC Leader environmental protection as above as above Any info on extensification effects? 10

11 Implementation plan for RD measures (compare Del 3.2.1, pp 7-8) EAFRD code augmented EAFRD code (based on Table A1 in D2.1.1) Group Measure names Main beneficiary sector (delivering commodities) Assumptions on eff effect (0 to 10 points) by sector [primary input augmenting change, aprim(ind, Factor bias (labour, capital, land) Capital Labour subsidy [- subsidy [- delcaptaxra dellabtaxra TE(IND, TE(IND, Options/proposals for implementation Exogenous shock [xinv(com, delprdtaxra Land subsidy, [- Nominal factor income [wfacinc ( delinvtaxrat E ( Subsidy to use less variable inputs in agriculture see the list of sectors at the bottom of this table 0 P = 0% rate of return, 1 P = 5% rate of return, P = 50% rate of return labour bias (for example) gives an above average increase in labour at given factor use. No entry means a neutral TFP increase. capital use in sector (also increases sector output) only increase of labour use in sectoral sector (also demand, for increases sector output effect output) see TFP points increases sectoral output input use, but unspecific) land use in sector sector ourput) Compensatory aid First afforestation of farmland (post-2000 contracts) 100%AA02 Land subsidy in A as above First afforestation of farmland (pre contracts) as above as above as above First establishment of agroforestry systems on... as above as above as above First afforestation of non-agricultural land as above as above as above Natura 2000 payments as above as above as above Forestry other measures: Forestenvironment payments as above as above as above Restoring forestry potential and introducing prevention... as above as above just income effect, potentially TFP points increase of regional unspecific for sectors various options in CAPRI, none in CGE subsidy as above as above 30%H %DA %F % G %I %O % Diversification of agricultural activities (Art 33) (DZ00+E000+J0 00+K000+N000 ) services Support for business creation and development as above as above Encouragement for tourist and craft activities (Art 33) as above as above 11

12 Implementation plan for RD measures (compare Del 3.2.1, pp 7-8) EAFRD code augmented EAFRD code (based on Table A1 in D2.1.1) Group Measure names Main beneficiary sector (delivering commodities) Assumptions on eff effect (0 to 10 points) by sector [primary input augmenting change, aprim(ind, Factor bias (labour, capital, land) Capital Labour subsidy [- subsidy [- delcaptaxra dellabtaxra TE(IND, TE(IND, Options/proposals for implementation Exogenous shock [xinv(com, delprdtaxra Land subsidy, [- Nominal factor income [wfacinc ( delinvtaxrat E ( Subsidy to use less variable inputs in agriculture see the list of sectors at the bottom of this table 0 P = 0% rate of return, 1 P = 5% rate of return, P = 50% rate of return labour bias (for example) gives an above average increase in labour at given factor use. No entry means a neutral TFP increase. capital use in sector (also increases sector output) only increase of labour use in sectoral sector (also demand, for increases sector output effect output) see TFP points increases sectoral output input use, but unspecific) land use in sector sector ourput) just income effect, potentially TFP points increase of regional unspecific for sectors various options in CAPRI, none in CGE 30%H %DA %F % G %I %O % (DZ00+E000+J0 00+K000+N000 ) in combinatin of sectors as in column E subsidy in HC Leader business advice as above Leader training as above as above Leader farm diversification as above as above Leader tourism and crafts as above as above Leader tourism as above as above Leader promoting women in the labour market as above as above Leader renewable energy as above as above Leader SME services as above as above Leader citizen services as above as above Leader shared business services as above as above Leader tourism services as above as above Leader workforce as above as above Leader information and promotion as above as above Leader innovative actions and networking as above as above Leader innovative actions as above as above Leader environmental technology as above 12

13 Implementation plan for RD measures (compare Del 3.2.1, pp 7-8) EAFRD code augmented EAFRD code (based on Table A1 in D2.1.1) Group Measure names Main beneficiary sector (delivering commodities) Assumptions on eff effect (0 to 10 points) by sector [primary input augmenting change, aprim(ind, Factor bias (labour, capital, land) Capital Labour subsidy [- subsidy [- delcaptaxra dellabtaxra TE(IND, TE(IND, Options/proposals for implementation Exogenous shock [xinv(com, delprdtaxra Land subsidy, [- Nominal factor income [wfacinc ( delinvtaxrat E ( Subsidy to use less variable inputs in agriculture subsidy in PC as above as above see the list of sectors at the bottom of this table 50%F %DZ % rest 0 P = 0% rate of return, 1 P = 5% rate of return, P = 50% rate of return labour bias (for example) gives an above average increase in labour at given factor use. No entry means a neutral TFP increase. capital use in sector (also increases sector output) only increase of labour use in sectoral sector (also demand, for increases sector output effect output) see TFP points Invest in combination of sectors as in column E Basic services for the rural economy and population (Art 33) Basic infrastructure (SAPARD only): for economy and rural polulation as above as above Village renewal and conservation of rural heritage (Art 33): Village renewal as above as above increases sectoral output input use, but unspecific) land use in sector sector ourput) just income effect, potentially TFP points increase of regional unspecific for sectors various options in CAPRI, none in CGE as above subsidy in HC Village renewal and conservation of rural heritage (Art 33): Rural heritage as above 50%F %DZ % rest as above Invest in combination of sectors as in column E Leader basic services Leader village renewal and conservation of heritage as above as above as above as above Leader basic infrastructure as above as above as above Leader cultural heritage as above as above as above Leader social economy services as above as above 13

14 SECTORS AA01 "Agriculture, hunting and related services"aa01"agriculture, hunting and related services" AA02 B000 C000 "Forestry, logging and related services" "Fishing" "Mining and quarrying" DA00 "Food products, beverages, and tobacco" DA00"Food products, beverages, and tobacco" DF00 DF00"Coke, "Coke, refined petroleum products, and nuclear fuels" refined petroleum products, and nuclear fuels" DZ00 "Other manufacturing (sector D000)" DZ00"Other manufacturing (sector D000)" E000 F000 "Electricity, gas and water supply" "Construction" E000"Electricity, gas and water supply" F000"Construction" G000 H000 G000"Wholesale and retail trade; repair of motor vehicles, motorcycles and personal and household goods"and personal and household goods" "Wholesale and retail trade; repair of motor vehicles, motorcycles H000"Hotels and restaurants" "Hotels and restaurants" I000 J000 "Transport, storage and communication" I000"Transport, storage and communication" J000"Financial intermediation" "Financial intermediation" K000 K000"Real estate, renting and business activities" "Real estate, renting and business activities" L000 M000 N000 L000"Public administration and defence; compulsory social security" "Public administration and defence; compulsory social security" M000"Education" "Education" N000"Health and social work" "Health and social work" O000 P000 "Other community, social, personal serviceo000"other activities" community, social, personal service activities" P000"Activities of households" "Activities of households" AA02"Forestry, logging and related services" B000"Fishing" C000"Mining and quarrying" For explanations what is behind "K000", for example see the components of sector "K" at: 14