This project studies the 1990s overhaul of the European Union's (EU) Common Agricultural Policy (CAP). The CAP is both the EU's largest industrial policy, with expenses accounting for more than 50% of the EU's total budget, and one of its central environmental policies: governing incentives regarding land use for more than 38% of its total area.
Following the World Trade Association's Uruguay Round of negotiations, the 1990s saw both a decrease in agricultural government support in the EU, and a switch from output price floors to input price subsidies. Du Puy proposes to develop a theoretical model of firm dynamics, and estimate it using detailed French agricultural data, in order to understand the impacts of this reform on agricultural productivity, commodity prices, and the equity of agricultural income support. Finally, they propose to combine this analysis with the use of remote sensing data (canny edge detection to measure the evolution of field geometry, and specific filters to detect algal blooms in inland waterways) to understand how increased selective pressure on the agricultural market is related to the transformation of rural landscapes and ecosystems.
To the best of du Puy’s knowledge, this would be the first academic study of the CAP using tools from industrial organization in order to gain a systematic understanding of the political economy and environmental incidence of agricultural subsidies in Europe. The project will also study counterfactual designs of the CAP, and compare potential reforms of the subsidy system.
