The connection between policy and other context variables and land markets is at the core of the policy debate, including the present reform of the Common Agricultural Policy (CAP). The current proposals for the post- 2013 CAP will include the switch of the payment regime from an historical to a regional basis. This component, as well as the greening and other ‘microprovisions’ can have an effect on the land markets. The objective of this chapter is to assess the potential impact of the proposed policy reform (in particularconcerning the regionalisation of payments) on the land market. Attention will focus on changes in propensity to rent-in and out and in transactions due to the proposed provisions for the post-2013 CAP. To achieve this goal, the authors jointly use: a) a survey of farmers stated intention, and b) a mathematical programming model simulating the land markets in different policy scenarios. Both are applied to a case study at the scale of the province of Bologna, Italy (NUTS 3).
The results of the model corroborate the results from the survey, though the model is much more reactive to policy changes, while the survey has a larger share of “no changes”. Both hint at a relevant reaction of the land demand and supply to the shift from the historical to the regionalised payments, due to the differentiated and opposite effects that the reform would have on different farm types and sub-regions.
The payment would be more capitalised into the land value, at the margin, as long as it is less constrained by the ownership of entitlements. As an effect, the regionalisation would potentially result in increased rental prices and in a tendency to re-allocate land
