The objective of this study is to investigate the cost-effectiveness of selected instruments of the Danish Rural Development Programme 2007-2013, which constitutes the Danish implementation of the EU Rural Development Programme under Pillar Two of the Common Agricultural Policy. The Programme aims to support sustainable economic growth and income diversification in rural areas (and in particular in economically vulnerable areas).
The study combines different datasets and simulation models at farm level (register data, Farm Accountancy Data, farm sector model, run-off models, etc.), municipality level (micro-based “National Accounts” for municipalities, municipality economic model) and national level (national economic model), which enables analysis at a fairly detailed geographical level and hence to evaluate the spatially distributed effects of the considered policy instruments, while at the same time incorporating economic interactions between different geographical areas, via inter-regional trade, commuting and influences via prices and wages.
In order to make results for different policy instruments comparable, we use the simulation models to assess the effects of a given amount of public support (e.g. 10 million €/year) for the respective instruments, and in turn assess the geographically distributed effects on farm income and employment, on production, value-added and employment in related upstream and downstream industries, on income and employment in the municipalities, and on a number of environmental indicators, such as land use, nitrogen run-off, pesticide use, etc.
Results of the analysis suggest that some of the instruments in the programme have some of the desired effect on income and employment, but for most of the considered instruments, these effects are not particularly beneficial for the economically most vulnerable rural areas.