Model-based evaluation of rural development policies

A primary concern in rural development policy is the impact of government expenditures on economic growth, income and employment. The Socio-Economic Benefit Assessment System (SEBAS) model developed through academic/government collaboration in the United States is an example of a practical tool for assessing the impact of federal programmes on these key development indicators. The model is based on an interregional social accounting matrix (SAM) and estimates the location and impact (including displacement effects) of economic initiatives. It has been used to examine the impact of loans and grants programmes and rural energy projects on regional value-added (GDP) and the quantity and quality of employment. Although the challenges of using model-based assessment are greater in the European Union due to data deficiencies and a complex rural development policy framework, considerable potential exists for deepening understanding of the effectiveness of policy measures, particularly in terms of region-specific impacts. Results obtained through modelling approaches such as computable general equilibrium (CGE) models, suggest that the impacts of programmes can be smaller than traditionally assumed and that there can also be important re-distributional effects. There are strong arguments for making modelling a key element in a broad evaluation of rural development policy.