The Impact of the 2013 CAP Reform on the Decoupled Payments' Capitalization into Land Values

Pavel Ciaian, d'Artis Kancs and Maria Espinosa ()
Additional contact information
Maria Espinosa: European Commission – JRC, https://joint-research-centre.ec.europa.eu/index_en

No JRC101619, JRC Research Reports from Joint Research Centre

Abstract: Decoupled direct payments were introduced in the European Union (EU) by the 2003 CAP reform in form of the Single Payment Scheme (SPS) and the Single Area Payment System (SAPS). The 2013 CAP reform changed both the implementation of decoupled payments as well as its budget. We assess the possible effects of the 2013 CAP reform on the capitalization of decoupled payments in land rental values. Our estimates suggest that the CAP reform leads to an increase in the capitalization of decoupled payments by additional 16 cents for each EUR of decoupled payments relative to the pre-reform situation. However, there is a relatively large variation in the reform effects between MS particularly between Old Member States (OMS) and New MS (NMS). In NMS the capitalization rate slightly reduces from 76% in the pre-reform period to 72% in the post-reform period. Although, the rate is significantly lower in OMS, it almost doubles (from 20% to 39%) due to the reform. The main source of the post-reform capitalization in the EU are the entitlement stock changes accounting for 19% of total post-reform capitalization level, followed by the internal convergence of payments with 18%, the budget change (including external convergence) with 1%, and the differentiation of payments (redistributive payment) with -7%. Overall, our estimates suggest that on average in the EU, the non-farming landowners’ policy gains are 25% of total decoupled payments in the post-reform period compared to 17% in the pre-reform period.

Keywords: Capitalization; Decoupled subsidies; CAP reform; Land market; Land prices; Land rents; SAPS; SPS; EU (search for similar items in EconPapers)
JEL-codes: H22 Q11 Q18 (search for similar items in EconPapers)
Pages: 66 pages
Date: 2016-07
New Economics Papers: this item is included in nep-eur
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://publications.jrc.ec.europa.eu/repository/handle/JRC101619 (application/pdf)

Related works:
Journal Article: The Impact of the 2013 CAP Reform on the Decoupled Payments’ Capitalisation into Land Values (2018)
Working Paper: The Impact of the 2013 CAP Reform on the Decoupled Payments' Capitalization into Land Values (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ipt:iptwpa:jrc101619

Access Statistics for this paper

More papers in JRC Research Reports from Joint Research Centre Contact information at EDIRC.
Bibliographic data for series maintained by Publication Officer ().