Economic impacts of CAP greening: application of an EU-wide individual farm model for CAP analysis (IFM-CAP)

Abstract

This paper presents the EU-wide individual farm-level model (IFM-CAP) applied to assess the economic effects of CAP greening. IFM-CAP is a static positive programming model developed to capture the full heterogeneity of EU farms in terms of policy representation and impacts. Simulation results show that, although the proportions of farms and utilised agricultural area (UAA) subject to CAP greening are sizeable (55 per cent of all farms and 86 per cent of UAA) at EU-27 level, the reallocated area caused by CAP greening represents only 4.5 per cent of UAA. Farm income and total production both decrease by 1 and 0.9 per cent, respectively. In total, around 29 per cent of the farm population is affected by CAP greening in the EU-27.