@article{Boysen-Urban:332991,
      recid = {332991},
      author = {Boysen-Urban, Kirsten and Boysen, Ole and Matthews, Alan  and Brockmeier, Martina},
      title = {EU Common Agricultural Policy Post-2020: Exploring the  Effects of Safety-Net Policy Instruments},
      address = {2018},
      year = {2018},
      note = {Presented at the 21st Annual Conference on Global Economic  Analysis, Cartagena, Colombia},
      abstract = {High price volatility in EU and world markets, caused by  climate change and extreme weather events, the growing  market orientation of the Common Agricultural Policy (CAP)  of the EU and other factors, led to income uncertainty.  This pushed the discussion about the future design of the  EU CAP aiming at more target-oriented policies to stabilize  farm income. At the same time the financial crises and  their consequences increased the focus on the efficiency of  CAP instruments. Compared to the US farm bill, risk  management instruments have played only a minor role in the  EU CAP in the past. Against this background, this study  aims at analysing different policy options of so-called  safety nets in the future CAP to cover downside risks of  farm income. Specifically, this study aims at answering the  following questions. How, and to what extent can safety net  instruments protect from downside risks and stabilize  agricultural incomes? How much will these flexible payments  increase the CAP budget costs? Are the current US safety  net policies a suitable model for designing such policies  for the CAP post 2020? To answer these questions, this  study applies an extended version of the Global Trade  Analysis Project (GTAP) that depicts a much more detailed  representation of the EU CAP policy instruments. In  addition, this extended model includes new policy  instruments to protect the agricultural sector in case of  price, revenue and income losses. A stochastic component  affects production and prices and thus income based on  exogenous global yield shocks and enables the assessment of  the income stabilising effect of the different policy  instruments. We simulated a baseline scenario and three  policy scenarios many times using the extended GTAP and  considering the full range of yield shocks. This set-up  allows us to assess the effects of safety net instruments  on income stabilization and budget cost.},
      url = {http://ageconsearch.umn.edu/record/332991},
}