Ex-Ante Analysis of the Regional Impacts of the Common Agricultural Policy: A Rural-Urban Recursive Dynamic CGE Model Approach

Maria Espinosa* (Corresponding Author), Demetrios Psaltopoulos, Fabien Santini, Euan Phimister, Deborah Roberts, Sebastien Mary, Tomas Ratinger, Dimitris Skuras, Eudokia Balamou, Manuel A. Cardenete, Sergio Gomez y Paloma

*Corresponding author for this work

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A recursive dynamic regional Computable General Equilibrium model is developed to assess the economic impacts of two Common Agricultural Policy (CAP) scenarios in six NUTS-3 (Nomenclature of Territorial Units for Statistics) (NUTS-1: major socio-economic regions, NUTS-2: basic regions for the application of regional policies, NUTS-3: small regions for specific diagnoses) regions of the European Union (EU). The main goal of the analysis is to assess the scenario effects (change in production, prices, income, employment) in the rural and urban parts of these regions as well as on the different sectors. The two scenarios analysed are related to a 30% reduction in Pillar 1 (market measures and direct support to farmers) support and the introduction of an EU-wide flat rate level of Pillar 1 support complemented by a 45% increase in Pillar 2 (Rural Development Policy) funds. Results show that the overall gross domestic product effects are not significant, due to the relatively low importance of both the agricultural sector and CAP spending in the regional economies. However, impacts on the agricultural sector are quite important and differ according to the nature of the policy shock. Also, the structural characteristics of each case study influence the rural-urban and sectoral spillovers, including impacts on region-specific agricultural activity.

Original languageEnglish
Pages (from-to)1342-1367
Number of pages26
JournalEuropean Planning Studies
Issue number7
Early online date24 Apr 2013
Publication statusPublished - 2014


ASJC Scopus subject areas

  • Geography, Planning and Development

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