Transcript Διαφάνεια 1
Demonstration of capabilities of a biregional CGE model to assess impacts of
rural
development
policies
(RURMOD-E)
Demonstration Workshop
Brussels, 26.11.2008
SPECIFICATION OF POLICY
SCENARIOS
Demetrios Psaltopoulos
Department of Economics
University of Patras
Introduction
Objective
Present specification of the 5 RURMOD-E Policy
Scenarios
Including causal mechanisms
Policy Scenarios
Full Decoupling
Increased Modulation (CAP H-C proposal):
i) Demand for construction
ii) Soft Modulation
Agriculture-centred RD Measures
Diversification of Rural Economy project
Renovation and Development of Villages project
Scenario 1: Full Decoupling (FULL DEC)
Coupled support flowing to the agricultural sector
becomes fully decoupled.
CAP subsidies (base year) set to zero – value
transferred from govt. to agricultural HSH (SFP).
No modulation assumed.
Two Direct Impacts
Increase in indirect activity tax rate for
agriculture
Increase in the income of agricultural HSH
Scenario 1: Full Decoupling – Direct Impact 1
Net Indirect Activity Tax of Agricultural Sector
Value Added of Agricultural Sector
Activity of the Agricultural Sector Domestic
Production of Agricultural Products
Labour is free from agriculture PCap.& PLand
Agricultural is linked with the other Rural/Urban
Sectors Second-order Production, Price, HHS
Income Effects ()
AGGREGATE AND NET RURAL/ URBAN
EFFECT DEPENDS ON COMPETING FORCES
Scenario 1: Full Decoupling – Direct Impact 2
Direct Income Transfers from GOV to Agr. HHS
Income and Spending of Agr. HHS
Goods Produced in the
study regions
Leak towards the RoW
Second-order Production,
Factor and Goods Prices
Price & HHS Income
Production
effects ()
TOTAL EFFECT DEPENDS ON INTERACTION OF THE
TWO MECHANISMS
Scenario 2: Increased Modulation (MODUL, SOFT
MOD)
Income support to agricultural HSH is reduced by 13%.
Equivalent amount + national co-financing (25% of total)
transferred to Pillar 2 as increased demand for:
Construction (MODUL)
Construction, Machinery, Education, Public Administration
(equal % - SOFT MOD)
Private contribution not taken into account.
Three Direct Impacts
Scenario 1 Impacts
Increased investment demand impact
Scenario 2: Increased Modulation
Exogenous Investment Demand of the Construction
(etc.) Commodity(ies)
Domestic Production of the Construction (etc.)
Commodity(ies)
Domestic Activity of the Construction (etc.) Sector(s)
What Happens with the Domestic Activity of other
Sectors? Usually positive effects in other sectors, but
possible trade-off due to decrease in AgrHHS
Consumption.
Employment, GDP
Scenario 3: Agriculture-centred RD Measures (RDM-AGRI (Axes 1,2))
Income support to agricultural HSH is reduced by 13%.
Equivalent amount + national co-financing (25% of total) transferred to Pillar
2 for Axes 1 and 2 measures.
To that we add study-area-specific public expenditure on Axes 1 and 2
measures {average per annum for 2000-2006 (Greece) and 2004-2006.(Czech
Republic)}
Distribution of expenditure to measures follows the 2000-2006 (Greece) and
2004-2006 (Czech Republic) patterns, respectively
Axis 1 expenditure: Increased demand for construction (70%) and machinery
(30%) {Farm Investment Plans + Young Farmers + Processing} and increase
in the income of Agricultural HHS (Early Retirement)
Axis 2 expenditure: Increased farm output (Agri-environment) and increase in
the income of Agricultural HHS (LFA)
Archanes-Heraklion
Axis 1: 67% of P2 (16% Early Retirement – 51% FIS, YFS, FP)
Axis 2: 33% of P2 (1.4% Agri-env. – 31.6% LFA)
Bruntal:
Axis 1: 3.7% of P2 (2.6% FIS, YFS, FP – 1.1% Early Retirement)
Axis 2: 96.3% of P2 (43.3% Agri-env. – 53% LFA)
Scenarios 4 and 5: Rural Development (Axis 3) Projects
Diversification of Rural Economy project (311)
Renovation and Development of Villages project (322)
Real data from 2 projects implemented in the Greek study area
Same shock to both models
Expenditure (construction stage)
Business turnover (311)
Estimate of increase in tourism (322)
Real values (base-year)
Potentially we could also assess:
Effects of change in local purchasing pattern (311)
Effects of migration of urban HSH to rural area (322)
Scenario 4: Diversification of Rural Economy project (311, RDIVERS)
Agrotourism unit
12 rooms – 24 beds
Surrounding area infrastructure + building + machinery and
equipment
Total cost (2004 prices) is 519.200 Euro (55% Public Expenditure –
45% Private)
Distribution:
Energy (40-41): 0.4%
Wholesale Trade (50-51): 1.3%
Retail Trade (52): 0.5%
Other Manufacturing (29): 6.8%
Private Services (70-74): 4.4%
Furniture (36): 3.8%
Construction (45): 82.8%
New Business turnover (55): 119000 Euro per annum
Scenario 5: Renovation and Development of Villages project (322,
RENOV)
Village Square
Total cost (2004 prices) is 228858 Euro (100% Public
Expenditure)
Distribution:
Energy (40-41): 18.5%
Private Services (70-74): 18.9%
Construction (45): 62.6%
Estimate of increase in tourism flows: +10% per annum
Scenarios 4 and 5: Rural Development (Axis 3) Projects
Diversification of Rural Economy project (311)
Renovation and Development of Villages project
(322)
Real data from 2 projects implemented in the Greek
study area
Same shock to both models
Expenditure (construction stage)
Business turnover (311)
Estimate of increase in tourism (322)
Real values (base-year)
THANK YOU FOR YOUR ATTENTION!!!