Title: Efficiency grounds and welfare effects in decoupling farm support. Insights from an AGE model of the Italian economy

Authors: Barbara Cavalletti, Benedetto Rocchi

Addresses: Department of Economics and Public Finance (Disefin), University of Genoa, Italy. ' Department of Agricultural and Resource Economics, University of Florence, Italy

Abstract: This paper investigates both efficiency and redistributive effects of the recent reform of Common Agricultural Policy in Italy. A general equilibrium model has been calibrated on a social accounting matrix of the Italian economy, adapted to represent the distribution of agricultural income between households. In simulation results the decoupling of farm support proves to be a welfare-improving policy. Moreover, this welfare effect is enhanced by redistributing the support towards low-income agricultural households. In terms of possible policy implications, simulation results suggest that redistributive effects in decoupling farm support may be a crucial aspect for the allocation of the EU agricultural budget.

Keywords: applied general equilibrium analysis; common agricultural policy; CAP; efficiency analysis; farm support schemes; income redistribution; SAM-based models; Italy; sustainable development; welfare effects; social accounting; simulation; budget allocation; welfare improvement; sustainable management.

DOI: 10.1504/IJSD.2006.011636

International Journal of Sustainable Development, 2006 Vol.9 No.2, pp.106 - 121

Published online: 06 Dec 2006 *

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