Ex-ante Spatial Policy Impact Analysis of the Rural Development Policy in European Rural Areas (RURAL ECMOD)

The present study aims at modelling the impact of different CAP (Common Agricultural Policy) scenarios on 6 case study regional economies. The starting point is the construction of a Social Accounting Matrix (SAM) obtained through a combination of mechanical downscaling of higher level input-output data with superior data, followed by a balancing procedure. A number of key elements facilitate the simulation of the policy scenarios: disaggregation of agricultural sector by farm size and the rural-urban disaggregation of activities and households. Policy scenarios focus on the impacts of relatively major changes in agricultural and rural policy (change in the balance between CAP pillars 1 and 2 or redistribution of funding within CAP pillar 2 – rural development policy). Models used are recursive dynamic CGE models, solved one year at a time, over the period 2006 to 2020. Policy measures are modelled on the base of RDP spending mapped for each region into investments in specific SAM sectors Economy wide effects of all scenarios remain limited, but slightly more important and significant when looking at the specifically rural economy. On the base of a limited number of case study areas, it seems that diversification policy mixes for rural development are in all cases beneficial to rural economies, while policy mixes focusing on agriculture competitiveness and public goods is only economically beneficial at short term and in rural, peripheral and agriculture-centred areas.