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The impact of CAP on sustainable development of rural areas from the perspective of EU research

The impact of CAP on sustainable development of rural areas from the perspective of EU research by Tomas Ratinger F. Handan Giray Ignacio Perez Dominguez Adriana Cristoiu. The presentation represents opinions of the authors, by no means the official opinion of the European Commission.

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The impact of CAP on sustainable development of rural areas from the perspective of EU research

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  1. The impact of CAP on sustainable development of rural areas from the perspective of EU research by Tomas Ratinger F. Handan Giray Ignacio Perez Dominguez Adriana Cristoiu The presentation represents opinions of the authors, by no means the official opinion of the European Commission Ratinger ey al. CAP for Rural Areas

  2. What is the JRC 7 Institutes in 5 Member States  3000 staff  320 M€/y budget + 40 M€ income IE – Petten, The Netherlands Institute for Energy IRMM– Geel, Belgium Institute for Reference Materials and Measurements ITU – Karlsruhe, Germany Institute for Transuranium Elements IPSC / IHCP / IES – Ispra,Italy Institute for the Protection and Security of the Citizen Institute for Health and Consumer Protection Institute for Environment and Sustainability IPTS –Sevilla,Spain Institute for Prospective Technological Studies Ratinger ey al. CAP for Rural Areas 2

  3. IPTS->SUSTAG – Research agenda Institute for Prospective Technological Studies (Science based support to policy making (EC)) • Agriculture and Life Sciences in the Economy Unit • (AGRITRADE Action) • SUSTAG Action (department/research group/project (FPx)) • Three research areas: • Sustainable farming systems • Value added of farm products • Rural development Ratinger ey al. CAP for Rural Areas

  4. Structure of the presentation • Territorial impact assessment • ESPON study • IPTS study: Sustainability of farming systems in NMS • IPTS study: TIA of 2003 CAP reform (Pillar I) Ratinger ey al. CAP for Rural Areas

  5. CAP Impact on Rural Development • Spatial Impact Assessment in which spatial units area classified as rural/urban • Territorial IA – when spatial units are larger autonomous territories like NUTS3, NUTS2 • Multi-sector Impact Assessment: interlinks between economic sectors • Sustainability Impact Assessment: environmental, economic, social, institutional perspectives Ratinger ey al. CAP for Rural Areas

  6. Impact of CAP in the rural development context • EU wide: ESPON (www.espon.eu), • Project 2.1.3: The Territorial Impact of CAP and Rural Development Policy (2002-2003) • NUTS3 level • statistical data (1999) and correlation, case studies, CAPRI model • Conclusion on CAP Pillar I: • Market supports distributed against cohesion objectives • Direct payments in line with cohesion objectives • Conclusions on CAP Pillar II: • LFA payments (surprisingly) to more prosperous regions • Less accessible regions receive more from Pillar 2 Ratinger ey al. CAP for Rural Areas

  7. Sustainable Farming Systems in the New Member States • IPTS study (conducted by DAP Cordoba) 2005-2006 • Case study approach, 2 NMS (CZ and LT) • Spatial approach – regional farming systems • an aggregation of farming practices and styles over a region (LAU1) • distinctive criteria: land use, agro-environmental conditions, production structure, demographic characteristics • economic performance of farming • environmental impact of farming • social context of farming • Policies: CAP Pillar I , Pillar 2 (particularly organic farming) Ratinger ey al. CAP for Rural Areas

  8. CZ Crop oriented - maize Crop oriented - sugar beet Livestock oriented Mixed oriented – potato Mixed oriented - grassland LT Urban neighbourhood Crop oriented Livestock oriented Intermediate Crop marginal Livestock marginal Regional farming systems LFA Ratinger ey al. CAP for Rural Areas

  9. Czech results Ratinger ey al. CAP for Rural Areas

  10. IPTS Study: TIA of CAP • Objective of the study: impact of 2003 CAP reform on rural areas • Are there differences of impacts among regions depending on “rural” characteristics? • Methodology: • CAPRI model (World wide agricultural sector model with regionalised supply of the EU at NUTS2 level) • Regional typology at NUTS2 • Testing differences of income impact (ANOVA) Ratinger ey al. CAP for Rural Areas

  11. CAPRI • Partial equilibrium, comparative static • Detailed supply module of European Agriculture (NUTS2 level, i.e. over 200 model blocks); [PMP method] • Market module covering agricultural trade world-wide. [econometric model] • Based on EAA and FADN • annually updated (using most recent Eurostat data, FADN) • Used by the Commission and in many projects • incorporated into DG AGRI baseline modelling system • used in SEAMLESS, SENSOR, etc. • regional breakdown – appreciated • In the study: 2002 base year, 2013 projection (reform impacts) Ratinger ey al. CAP for Rural Areas

  12. Regional Typology • NUTS 2 level typology • 210 regions for EU25, 169 for EU15 • not the best – differences within regions, often this is more formal than actual region • Several typologies (points of view) used • OECD rural typology –> 3 categories: Predominantly Urban, Significantly Rural, Predominantly Rural • RurXA: an index reflecting the area shares of NUTS3 regions according their “rurality” -> 4 categories • RurXGDP: an index reflecting the GDP shares of NUTS3 regions according their “rurality” -> 4 categories • LFA share -> 5 categories • Primary sector employment -> 4 categories • Long term unemployment rate -> 4 categories Ratinger ey al. CAP for Rural Areas

  13. Relationship between typologies • More or less clear reference • RurXA and RurXGDP split the category “Significantly rural” Ratinger ey al. CAP for Rural Areas

  14. LFA and Rural typologies • More LFA in more rural region • Significantly rural regions – any share of LFA Ratinger ey al. CAP for Rural Areas

  15. Primary sector employment • Less primary sector employment in “urban” economies • If “rural” economies (NUTS3) dominate regional economy (NUTS2) then all primary sector employment levels represented equally. Ratinger ey al. CAP for Rural Areas

  16. Long term unemployment • Not clear reference to rural areas • Slightly more unemployment in areas with more rural features Ratinger ey al. CAP for Rural Areas

  17. Spatial distribution effects of CAP • Output value, Subsidies, Income (€/ha) • farms in SR exhibit around 80% of PU (Predominantly Urban) figures • in PR around 70% of PU • Subsidies are proportional to Revenue • (all statistically significant, ANOVA); • (no difference EU25 and EU15 in relative figures) Ratinger ey al. CAP for Rural Areas

  18. Spatial distribution effects of CAP • Farms in the regions of high unemployment get less subsidies, but might earn more per ha of UAA than farms in the regions of low unemployment. • (not in line with ESPON) Ratinger ey al. CAP for Rural Areas

  19. Effects of reform (in 2013) • Relative change (y13-y02)/y02 • Equal territorial impact on income in EU15 • Distribution of support (a change) in favour PU • Effect of NMS on Rural/Urban balance in EU25 • Increased support in NMS Ratinger ey al. CAP for Rural Areas

  20. Effects of reform (in 2013) • Primary sector employment typology • Uneven territorial impact on income in EU25 • Unemployment typology • more dramatic cut of supports in regions with high unemployment (EU15) Ratinger ey al. CAP for Rural Areas

  21. Effects of reform (in 2013) • Primary sector employment typology • Uneven territorial impact on income in EU25 • Unemployment typology • more dramatic cut of supports in regions with high unemployment (EU15) 30 regions 20 regions Ratinger ey al. CAP for Rural Areas

  22. Effects in respect of LFA • Less income impact in regions with a high share of LFA • also smaller increase of fallow land Ratinger ey al. CAP for Rural Areas

  23. CAP reform income on fallow land • Increase of fallow land due to reform • seemingly even distribution if EU25 considered • but different (statistically significant) rates of change if only EU15 considered • higher relative change in urban areas of EU15 and rural areas of EU10 Ratinger ey al. CAP for Rural Areas

  24. Conclusions • Higher income, more supports in “urban” regions • For EU 15, the 2003 CAP reform is territorially neutral (for income) • Adoption of CAP increases income in EU10, more in “rural” regions. • Less income impact in regions with a high share of LFA • Fallow land will increase (more in “urban” regions and in agr. “favoured” areas) Ratinger ey al. CAP for Rural Areas

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