Die Bodenkultur - Journal for Land Management, Food and Environment

K. Salhofer and F. Sinabell:

Utilising Equilibrium-Displacement Models to Evaluate the Market Effects of Countryside Stewardship Policies:

Method and Application


As part of the so called accompanying-measures of the reform of the Common Agricultural Policy Council Regulation (EEC) 2078/92 was established in 1992. The goals of this regulation are to reduce farm output and/or to reduce environmentally detrimental side effects of farm production and/or to support farm income. This paper demonstrates how to use equilibrium-displacement models to analyse market effects of programmes that were introduced according to this regulation. It is argued that countryside stewardship policies affect the product output in two different ways: first, there is the output decreasing effect of the programme restriction and second, there is an output increasing effect of direct payments. An empirical example of our method for one of these programmes in Austria shows that the overall output effect is ambiguous and that the final outcome is more likely to be positive. Hence, this particular scheme is probably counter-productive in decreasing production volumes, a major goal of Council Regulation (EEC) 2078/92.

Key words:  agricultural policy analysis, countryside stewardship policies, equilibrium-displacement models.