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Capitalization of the SPS into Agricultural Land Rental Prices under Harmonization of Payments

H. Allen Klaiber, Klaus Salhofer () and Stan Thompson

No DP-62-2016, Discussion Papers from University of Natural Resources and Life Sciences, Vienna, Department of Economics and Social Sciences, Institute for Sustainable Economic Development

Abstract: This paper provides estimates of the capitalization of the Single Payment Scheme (SPS) payment of the Common Agricultural Policy (CAP) on agricultural land rental rates. We address problems of unobserved heterogeneity and sample selection. As the 2013 CAP Reform calls for the harmonization of SPS payments, we estimate the implications of this mandate on agricultural land rental rates over time as Germany began harmonizing payments in 2010. Using Bavarian farm level panel data we find strong capitalization effects that increase substantially in the years following 2009. On average, the marginal effect on rental rates of an additional SPS euro is 38 cents, growing over time to 57 cents as harmonization develops.

Keywords: CAP Reform; Capitalization Effect; Sample Selection; Panel Data; German Farms (search for similar items in EconPapers)
JEL-codes: C33 Q15 Q18 (search for similar items in EconPapers)
Date: 2016
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https://www.econstor.eu/bitstream/10419/235188/1/dp62-2016.pdf (application/pdf)

Related works:
Journal Article: Capitalisation of the SPS into Agricultural Land Rental Prices under Harmonisation of Payments (2017) Downloads
Working Paper: Capitalization of the SPS into Agricultural Land Rental Prices under Harmonization of Payments (2015) Downloads
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