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Abstract
With the latest reform of EU Structural Policy, the Highlands and Islands have been
excluded from further support by Structural Funds beyond 2013, but the new Scottish
Rural Development Programme has increased CAP Pillar 2 expenditures in Scotland. A
modified version of a system dynamics model constructed for an EU-wide case-study
project (TOP-MARD) was used to simulate the effects of these and other policy changes
in Caithness and Sutherland (C&S), a remote rural area in Northern Scotland. Several
alternative modelling scenarios were developed, mostly relating to reconfigurations of
Pillar 2 spending within the area. The modelling results, i.e. projections from 2001 to
2021, are discussed in terms of agricultural employment, regional population, and
economic trends. It is shown that by targeting Pillar 2 money to non-agricultural rural
development measures instead of to farm investments, less favoured area or agrienvironmental
schemes, the long-term trends in severe depopulation, ageing and deindustrialisation
in the area can be alleviated but not avoided. Finally, some conclusions
are drawn, both about the implications of the results for sustainability in C&S, and in
general for future sustainable rural development policy.