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Potential of differentiated payment levels based on standard cost approaches: A case study of selected rural development measures in Germany

Offermann, Frank; Nieberg, Hiltrud and Hecht, Judtih (2008) Potential of differentiated payment levels based on standard cost approaches: A case study of selected rural development measures in Germany. Paper at: The 82nd Annual Conference of the Agricultural Economics Society, Royal Agricultural College, 31st March to 2nd April 2008. [Completed]

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Summary

In accordance with EU regulations, payment levels for several measures of rural development programs are calculated on the basis of standard cost approaches, using 'typical’ or average figures for costs incurred and income forgone. Resulting uniform payment rates have been frequently discussed and criticised as being inefficient, having a low cost-effectiveness and generating excessive windfall profits. However, few empirical studies exist which quantitatively examine potentials of a more differentiated standard cost approach. By using German farm accountancy data, this study analyses effects of a payment differentiation according to regional and farm individual characteristics on producer rents, budget expenditures and economic efficiency. Preliminary results show that though overcompensation could be reduced in most cases, savings in budget expenditure are often small and might be even offset by increasing administration costs. Generally our analysis indicates that potential benefits of differentiated standard cost approaches can be partly exploited if a) variances of the cost of participation in the universe of farms are high and the discriminatory natures of differentiation are significant, and b) positive correlations between costs and environmental benefits are strong.


EPrint Type:Conference paper, poster, etc.
Type of presentation:Paper
Keywords:differentiated payment levels, efficiency, cost-effectiveness, standard cost approach, rural development schemes, agri-environmental measures, Sozio-Ökonomie
Subjects: Food systems > Policy environments and social economy
Research affiliation: Switzerland > FiBL - Research Institute of Organic Agriculture Switzerland > Socio-Economics > Agripolicy
Deposited By: Hecht, Dr. Judith
ID Code:19331
Deposited On:29 Aug 2011 20:44
Last Modified:29 Aug 2011 20:44
Document Language:English
Status:Unpublished
Refereed:Not peer-reviewed

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