Impact of the CAP post 2013 on land market. The case of the Pisa province

Over the last twenty years, the role of agricultural policy in changing the demand for productive factors had been widely studied, emphasising the role of Agricultural Policy reforms’ impacts on land demand and land market. The CAP has been recently restyled. In October 2011, the European Commission first released the CAP reform proposal (COM(2011)625/3). The CAP 2014-2020 encompasses a revision of the first pillar policy and some novelties within the second pillar policy. In Italy, the reform also includes the introduction of uniform payments (regionalisation) with partial converge mechanism (so-called “Irish model”). The objective of the present paper is to provide an ex-ante analysis the main instruments of the CAP 2014-2020. The paper focuses on two novelties under Pillar I, i.e. the shift to regionalised payments and the introduction of the greening. The paper evaluates the extent to which the new CAP could affect land demand by estimating farm households’ willingness to pay for additional land. A case study in Pisa Province is developed. The results point-out that the new instruments under the reformed CAP would not uniformly affect farms types and could lead to changes in the demand. Alternative policy designs can significantly affect the willingness to pay and hence shows capitalisation effects.