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Alternative Allocation Keys for EU CAP Funding

Cao, Y., Elliott, J., Moxey, A. and Zahrnt V. (2010).

Foreword from Rob Cooke, chair of the LUPG:

"A key consideration for the future Common Agricultural Policy (CAP) will be identifying the basis for the allocation of budgets between Member States. Current allocations largely reflect historic spending rather than an objective assessment of need. The primary purpose of this research is, therefore, to:

* identify possible indicators capable of being applied at the EU level as an objective, applied, basis for future allocations of CAP (Pillar 1 and Pillar 2) funding between Member States.
* to explore the potential implications for individual Member States of adopting each indicator as the basis for financial allocations, by comparison with the current budgetary pattern.

This analysis is intended as an objective contribution to ongoing discussions on the ways in which CAP funding might be allocated in future. A decision was made not to suggest or model specific selective combinations of individual indicators that could be used as new future allocation keys, because of the potential complexity involved in such an approach. Instead, the focus has been on understanding the strengths, weaknesses and budgetary implications of the individual indicators themselves. The selection of the indicators assessed in this research is based on five important criteria, specifically:

* Data availability and robustness – data for each indicator must be readily available for the whole of the EU, robust and collected according to common agreed standards; not easily manipulated to skew allocations.
* Policy priority – indicators should, as far as possible, have a clear link to the delivery of publicly stated EU policy objective(s).
* Allocative effectiveness – funding should be allocated where the return will be most cost-effective.
* Dynamic incentive – indicators should reward positive change from the current baseline, rather than simply rewarding those with the largest baseline position.
* Fairness – whilst this is strongly related to the other criteria, Member States who have a poor record of public goods stewardship should not be rewarded and conversely Member States with a good track record should not be penalised.

There are, however, inherent conflicts between some of the issues above and so the selection of indicators is based on those with the best fit against these criteria. The analysis also identifies some indicators that could prove useful to inform the distribution of CAP funding in the future subject to improvements in data availability/robustness.

We trust that this report will make a useful contribution to an open debate about the basis for future allocations of CAP funding as well as providing further thoughts on a number of ideas for additional indicators that may be suitable for consideration in the future."

You can download the study here.