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Ex ante model results and indicators before and after the CAP 2003 reform

Description of modelled scenarios

Two types of comparisons are presented.

  • • In the first comparison, modelled environmental consequences of two reform scenarios are compared to a baseline scenario without a policy change.
  • • The second comparison concerns observations of agri-environmental indicators between two periods, one before and one after the reform was implemented.

The model simulations compare a policy with subsidies partly linked to production (Agenda 2000) versus one with decoupled subsidies (2003 CAP reform). All other variables affecting the decision of farmers are left changed (notably prices, land use restrictions, incentives of the agri-environmental programme). We compare the base-line scenario, i.e. a continuation of the Agenda 2000 reform in Austria, with two scenarios:

Council decoupling: This scenario models decoupling - the introduction of the

single farm payment, given that the 'good agricultural and environmental condition'

3

of land is maintained.

Austrian decoupling: This scenario is similar to a) allowing for several exceptions of the reform. It models the actual implementation in Austria. Within limits, payments coupled to heads of livestock (suckler cows and heifers), and to the output of beef (40% of the slaughter premium) are not be abolished.

In the model scenarios, organic farming and the adoption of agri-environmental measures will not be affected by the reform directly, but indirectly. The assumption is made that the conditions of the programme for rural development (the framework of agrienvironmental measures) and specific market conditions for organic products do not change. This implies that farmers would get commodity mark-ups for organic production similar to those observed presently. Farmers would be free to enter or quit the agrienvironmental programme in the scenarios.4 A moderate rate of technical progress and constant real input prices are given exogenously. More details of the implementation of the reform in Austria are documented in Schmid, Sinabell and Hofreither (2007) and in Sinabell and Schmid (2003).

 
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