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Institut für Landwirtschaftliche Betriebslehre

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    Agro-economic policy analysis with the regional production model ACRE : a case study for Baden-Wuerttemberg
    (2011) Henseler, Martin; Dabbert, Stephan
    Since its introduction the Common Agricultural Policy (CAP) of the European Union (EU) has undergone several reforms in order to adapt policy instruments and enable the agricultural sector to fulfil multiple functions with respect to economic, supply and environmental objectives. In the German federal state Baden-Wuerttemberg agricultural production is characterized by regional heterogeneity. Therefore it is important to estimate the impacts resulting from changes in the CAP at a detailed regional level. In this study the agricultural policy model ACRE (Agro-eConomic pRoduction model at rEgional level) has been used to simulate different policy scenarios and to analyze regional economic, production and environmental impacts. In particular the study aims to address the following research questions: What are the regional impacts of different policy measures in the German federal state Baden-Wuerttemberg with respect to economic, production and environmental objectives? How suitable are the simulated policy measures for achieving the policy objectives of the CAP 2003 reform, as well as the objectives of subsidy reduction, promotion of energy crop production, reduction of environmental pollution and promotion of agro-environmental measures? How suitable is the regional supply model ACRE as a tool for policy analysis and policy decision support? In order to address the research questions, ACRE has been updated, adapted and extended to simulate agricultural production in the federal state Baden-Wuerttemberg at NUTS3 level. The policy scenarios simulated in this study are defined to cover recent discussions on the future development of the CAP and their results are analysed according to a regional framework for NUTS3 counties, farm types and the complete model region. The simulation of the reference year (REF) implies the policy reform Agenda 2000 in the simulation year 2000. Thus, REF represents the observed situation of regional agricultural production on whose statistical data ACRE is calibrated. The scenario CAP2003 simulates the policy measures of the CAP 2003 reform in the simulation year 2015. Assumptions of increased yields and prices as well as harmonized direct payments for arable land and grassland result in an increase in income as well as in an increase of subsidy volume. In the entire model region Baden-Wuerttemberg cereal production increases while the production of fattening bulls and pigs decreases. Increases in crop production intensity result in an increase in environmental pollution. The scenario CAP2003 is used as the baseline scenario to compare the results of simulated policy scenarios which are delineated in the following paragraphs only with the most important results for the complete model region Baden-Wuerttemberg. In two subsidy reduction scenarios the simulated policy instruments aim to reduce subsidy volume by reducing Pillar 1 payments by 60% and by shifting 70% of the money from Pillar 1 to Pillar 2 respectively. Both scenarios result in the positive impact of a decrease in subsidy volume, but show a negative impact, especially an increase of abandoned land. In two energy crop scenarios the production of energy maize is simulated under the assumption that different situations in energy policy and energy markets result in different competitiveness between production of energy maize and food. In both scenarios energy crop production partially replaces cereal production, although the extent varies according to the high or small level of competitiveness between production of energy maize and food. Impacts on agricultural income and subsidies are small while increased environmental pressure is expected in the event of a significant expansion in energy crop production. Two nitrogen reduction scenarios simulate policy measures according to the water framework directive (WFD) and the OSPAR convention. The scenario according to the WFD (limitation of organic nitrogen input to a maximum of 170kg nitrogen per hectare) does not result in any impacts. In contrast, the scenario according to the OSPAR convention (reduction of nitrogen input quantities by 10%) results in a decrease in environmental pollution and is accompanied by a reduction of income and reduction of agricultural production under land abandonment. In the scenario of mandatory agri-environmental measures (AEM) it is assumed that the area with applied AEM is extended. The increase of AEM area results in a decrease in cereal production and a reduction of environmental pollution, while income decreases only slightly. Two combined scenarios simulate a mix of different policy and market situations which provoke an intensive and an extensive agricultural production. The results of these scenarios illustrate the interaction of the single policy measures. The measures of subsidy reduction have similar reducing impacts on income and subsidy volume in both scenarios. In the intensive production scenario high competitive energy crop production and a less restrictive nitrogen restriction result in a compensation effect of land abandonment by extension of energy crop area. In the extensive production scenarios, less competitive energy crop production and a high restrictive nitrogen constraint result in reduced agricultural production, increased land abandonment and reduced environmental pressure. In order to evaluate the impact of the simulated policy measures on the achievement of policy objectives the results of all scenarios are compared and ranked according to their impact on the policy objectives. The analyses of the model results show impacts of policy measures which are likely to be expected. However, the analyses at NUTS3 as well as farm types' level reveal that the impacts of the policy measures can be regionally quite different. Thus the detailed regional model results clearly show that (and where) the implementation of agricultural policy measures requires a regional specific evaluation and monitoring. In order to discuss the study with regard to the methods applied and the outcome, a final strengths and weaknesses analysis was conducted. The analysis highlights the strengths of the study (e.g. the model validation, the regional analysis of different policy scenarios, the possibility of cooperation with regional stakeholders). The validation and the results of the study also show that ACRE is a suitable tool for regional agricultural policy analysis and policy decision support. Supplementary work could help to overcome single shortcomings and caveats and to further develop the model. However, ACRE can already be used now as a useful tool for the regional agricultural policy analysis of the CAP in Baden-Wuerttemberg.