CAP Direct Payments and Economic Resilience of Agriculture: Impact Assessment

Agnė Žičkienė, Rasa Melnikienė, Mangirdas Morkūnas () and Artiom Volkov
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Agnė Žičkienė: Lithuanian Centre for Social Sciences, Institute of Economics and Rural Development, Vivulskio str. 4A-13, 03220 Vilnius, Lithuania
Rasa Melnikienė: Lithuanian Centre for Social Sciences, Institute of Economics and Rural Development, Vivulskio str. 4A-13, 03220 Vilnius, Lithuania
Mangirdas Morkūnas: Lithuanian Centre for Social Sciences, Institute of Economics and Rural Development, Vivulskio str. 4A-13, 03220 Vilnius, Lithuania
Artiom Volkov: Lithuanian Centre for Social Sciences, Institute of Economics and Rural Development, Vivulskio str. 4A-13, 03220 Vilnius, Lithuania

Sustainability, 2022, vol. 14, issue 17, 1-24

Abstract: This study presents an innovative approach to measuring the impact of EU CAP direct payments on the economic resilience of agriculture at a sectoral level. The construct of resilience is approached from the perspective of the resilience of the main functions of the sector. The overall level of direct payments impact on sectoral economic resilience is seen as a weighted sum of the payments’ impact on the resilience of the main economic functions of the sector. Such an approach, allowing for a comprehensive estimate of subsidy impact on the most essential areas of agriculture, is universal and can be adapted to measure economic resilience of other economic sectors. For the empirical application we used panel data from 27 EU countries over the period 2005–2019. The results revealed that the overall impact of direct payments on the economic resilience of agriculture across EU-27 was positive. However, the influence of the payments on different key functions of the sector diverged. The most evident and alarming negative changes in the economic resilience levels were observed in terms of efficiency of farms. Negative impact on separate indicators may pose a risk that the influence of direct payments on economic resilience of agriculture may not be sustainable in the longer run.

Keywords: Common Agricultural Policy; economic resilience; direct payments; agriculture; EU-27 (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:14:y:2022:i:17:p:10546-:d:896298

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