NDLI: Investment in Farming under Uncertainty and Decoupled Support: A Real Options Approach

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Investment in Farming under Uncertainty and Decoupled Support: A Real Options Approach

Content Provider	Scilit
Author	Corato, Luca Di Zormpas, Dimitrios
Copyright Year	2019
Description	Journal: SSRN Electronic Journal Under the current version of the Common Agricultural Policy (CAP), payments to EU farmers are decoupled from the production of agricultural commodities. In fact, farmers qualify for CAP support as soon as their land is maintained in good agricultural and environmental condition.In this paper, we study how decoupled payments influence the decision to invest in farming. We show that decoupling is implicitly providing a costless hedge against volatile farming profits. Consequently, a higher decoupled payment leads the potential farmer to hasten its investment but also results in a farm with lower productive capacity.
Related Links	http://www.unive.it/pag/fileadmin/user_upload/dipartimenti/economia/doc/Pubblicazioni_scientifiche/working_papers/2019/WP_DSE_dicorato_zormpas_06_19.pdf https://papers.ssrn.com/sol3/Delivery.cfm?abstractid=3346170
ISSN	10914358
e-ISSN	15565068
DOI	10.2139/ssrn.3346170
Journal	SSRN Electronic Journal
Language	English
Publisher	Elsevier BV
Publisher Date	2019-02-26
Access Restriction	Open
Subject Keyword	Journal: SSRN Electronic Journal Agricultural Economics Real Options Land Development Capital Intensity Passive Farming
Content Type	Text
Resource Type	Article
Subject	Public Health, Environmental and Occupational Health Psychiatry and Mental Health

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