Utilising equilibrium-displacement models to evaluate the market effects of countryside stewardship policies: Method and application

As part of the so called accompanying-measures of the reform of the Common Agricultural Policy Council Regulation (EEC) 2078/92 was established in 199 2. The goals of this regulation are to reduce farm output and/or to reduce environmentally detrimental side effects of farm production and/or to suppo rt farm income. This paper demonstrates how to use equilibrium-displacement models to analyse market effects of programmes that were introduced accord ing to this regulation. It is argued that countryside stewardship policies affect the product output in two different ways: first, there is the output decreasing effect of the programme restriction and second, there is an out put increasing effect of direct payments. An empirical example of our metho d for one of these programmes in Austria shows that the overall output effe ct is ambiguous and that the final outcome is more likely to be positive. H ence, this particular scheme is probably counter-productive in decreasing p roduction volumes, a major goa of Council Regulation (EEC) 2078/92.