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    The 2003 CAP reform: Do decoupled payments affect agricultural production?

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    Author
    Howley, Peter
    Hanrahan, Kevin
    Donnellan, Trevor
    Keyword
    Decoupled payments
    WTO green box
    Agricultural production
    Date
    2009
    
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    URI
    http://hdl.handle.net/11019/704
    Citation
    P. Howley, K. Hanrahan and T. Donnellan. (2009) The 2003 CAP reform: Do decoupled payments affect agricultural production? RERC Working Paper Series PUT 09-WP-RE-01
    Abstract
    The move from coupled payment policy instruments to payments that are decoupled from production have made estimating future trends in agricultural output much more challenging. Using a dynamic multi product partial equilibrium model, the overall aim of this paper is to examine the potential supply inducing effect of decoupled payments. This issue is important in the context of WTO negotiations, and, in particular, in discussions surrounding the appropriateness of decoupled payments being included as a ‘green box’ policy. The results suggest that farm operators, to a large extent, do not treat these payments as fully decoupled and they do in fact maintain a strong supply inducing effect on agricultural production. Findings suggest, however, that this trade distorting effect is less than previously coupled payments.
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    Agricultural Economics
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