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How to design a targeted agricultural subsidy system: efficiency or equity?
1Centre for Environmental and Climate Research, Lund University, Lund, Sweden. cascong@126.com
Plos One
|August 10, 2012
Summary
European Union agricultural subsidies are inefficient, failing to support farmers or food security. The current system results in "reverse redistribution," prompting an examination of alternative, more equitable subsidy models for improved outcomes.
Area of Science:
- Agricultural Economics
- Public Policy Analysis
- Environmental Economics
Background:
- Current European Union (EU) agricultural subsidy policies face significant inefficiencies.
- These policies are often ineffective in supporting farmer incomes or ensuring food security.
- Subsidies can lead to irrational, decoupled payments negatively impacting the environment and social cohesion.
Purpose of the Study:
- To critically appraise the EU's current agricultural subsidy policy.
- To identify and analyze the inefficiencies and negative consequences of existing subsidy structures.
- To explore and evaluate alternative subsidy systems for greater efficiency and equity.
Main Methods:
- Analysis of current EU agricultural subsidy policy.
- Development and application of a simplified economic model.
- Examination of alternative subsidy models including pure loans, harvest taxes, and income-contingent loans.
Main Results:
- The study identifies multiple sources of inefficiency in current EU agricultural subsidies.
- Economic modeling demonstrates inherent
- reverse redistribution
- within the existing tax-subsidy system.
- Current policies may negatively affect environmental protection and social cohesion.
Conclusions:
- The current EU agricultural subsidy system is fundamentally inefficient and inequitable.
- A
- reverse redistribution
- effect is unavoidable under the present structure.
- Alternative models like income-contingent loans offer potential for more efficient and equitable subsidy distribution.
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