Environmental and economic effects of a fall in cereal prices in the EU internal market: The case of Denmark
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Reform of the European Common Agricultural Policy (the CAP) will reduce cereal prices in the Internal Market while simultaneously increasing direct support to farmers (Agenda 2000). This paper examines the possible effects of liberalisation of the CAP by modelling the effects of a 10 per cent reduction in cereal prices combined with compensation to farmers. We applied an integrated modelling system suitable for estimating both the economic and environmental consequences of agricultural and environmental policy measures and calculated the effects of a 10 per cent fall in cereal prices on nitrogen loading of the Danish marine waters, on private consumption, GDP, the balance of payments, and employment. The results indicate that price reductions do not have significant effects on nitrogen loading relative to the 50 per cent reduction target, since a 10 per cent reduction in cereal prices only leads to a 2.4 per cent reduction in loading.
|Environmental and Resource Economics
|Number of pages
|Published - Sep 2001
- Agricultural policy, Environmental economics, Environmental effects, Integrated modelling, Nitrogen loading