Impacts of the CAP 2014–2020 on the Agroenergy Sector in Tuscany, Italy

Abstract

The agricultural sectors’ contribution to the provision of energy is a central issue in Horizon 2020 strategies and has shaped the public and research debates on the future of the bioeconomy. The common agricultural policy (CAP) has been one of the main drivers of farmers’ behavioural changes and represents the main agricultural policy instrument to address viability of rural areas and maintaining the profitability of the agricultural sector. To contribute to the ongoing policy debate towards CAP reform, this paper will provide an empirical model to simulate the impact of an alternative CAP mechanism on the provision of renewable energy. By applying a dynamic mathematical programming model, the paper tests the impact new policy measures will have on the provision of a second-generation of bio fuel crops that represent a relevant option for Tuscan farmers. Results show that CAP reform positively impacts the supply of energy crops mainly due to the introduction of greening payments, which allows an enlarging of crop diversification. Model results stress also the income stabilisation effects of energy production introduction at farm level, due to reduction of farm exposure to market prices fluctuations.

Keywords

• common agricultural policy
• energy production
• farm household model
• mathematical programming model
• biogas
• short rotation coppice
• real options