Valuating single payment entitlements: Spain

Transcription

1 Insiuo Nacional de Invesigación y Tecnología Agaia y Alimenaia (INIA) Spanish Jounal of Agiculual Reseach (4), Available online a ISSN: X Absac Valuaing single paymen enilemens: Spain V. Caballe, N. Guadalajaa* and E. de la Poza Depaameno de Economía y Ciencias Sociales. Univesidad Poliécnica de Valencia. Camino de Vea, s/n Valencia. Spain This pape aemps o develop a valuaion mehod fo esimaing he make value of he single paymen sysem (SPS) enilemens in he communiy agiculual policy (CAP) efom. These enilemens ae a new agiculual inangible asse which is no linked o land and has a simila financial pefomance o bonds. Afe applying he PERT mehod, which was applied o he inheen isk involved in valuing fixed income asses, and specifically o he unceainy of CAP afe 203, his mehodology is applied o esimae he aveage value of enilemens in Spain. Addiional key wods: agiculual inangible asse, CAP, PERT, value. Resumen Valoación de los deechos pocedenes del égimen de pago único: aplicación al caso de España El pesene abajo peende desaolla un méodo de valoación paa esima el valo de mecado de los deechos geneados en el égimen de pago único (RPU) de la efoma de la políica agaia comuniaia (PAC), que suponen un nuevo inangible de naualeza agaia no ligado a la iea, cuyo compoamieno financieo puede se simila al de los bonos. Paiendo de la meodología PERT aplicada al iesgo inheene en la valoación de acivos de ena fija y en conceo a la inceidumbe de la PAC después del 203, ese méodo se aplica a la esimación del valo medio de los íulos en España. Palabas clave adicionales: inangible agaio, PAC, PERT, valo. Inoducion Since is oigins o he pesen-day, he Common Agiculual Policy (CAP) has had o change damaically o ovecome new challenges. A fis, CAP focused no only on fulfilling he goals se ou in Aicle 39 of he Teay of Rome (incease poduciviy, assume an equal sandad of living fo fames, and povide easonable pices fo commodiies), bu also on coecing he «changes» ha migh have emeged. Afe concenaing on pices cus, CAP also ganed subsidies o fames. Finally, he cuen CAP efom (2003) (Diecive 782/2003/CEE; OJ, 2003) modified he efom of 992, ha is, by subsiuing he measues of suppo pices fo diec aids and by inoducing he single paymen sysem (SPS) in 2005/2006. Fuhemoe, his efom suppoed he Rual Developmen Policy (RDP), which led o inceasing inees owads aids fo ual developmen in Spain duing he peiod As Table shows, ual developmen subsidies inceased by ove 400% fom 992 o Alhough mos Euopean counies (Belgium, Denmak, Gemany, Ieland, Ausia, Pougal, Sweden, he Unied Kingdom and Ialy) adoped he SPS which * Coesponding auho: nguadala@omp.upv.es Received: ; Acceped: Abbeviaions used: AC (Spanish Auonomous Communiy), CAP (common agiculual policy), EAFRD (Euopean Agiculual Fund fo Rual Developmen), EC (Euopean Commission), EU (Euopean Union), FEGA (Fondo Español de Gaanía Agaia/Spanish Agaian Guaanee Fund), GAEC (good agiculual and envionmen condiion), INE (Insiuo Nacional de Esadísica/ Spanish Naional Saisics Insiue), MAPA (Miniseio de Agiculua, Pesca y Alimenación/Spanish Minisy of Agiculue, Fishey and Food), MARM (Miniseio de Medio Ambiene y Medio Rual y Maino/Spanish Minisy of he Envionmen and Rual and Maine Affais), PERT (pogam evaluaion and eview echnique), RDP (ual developmen policy), SFP (decoupled single fam paymens), SPS (single paymen sysem), UAA (uilized agiculual aea).

2 738 V. Caballe e al. / Span J Agic Res (2009) 7(4), Table. Developmen of he paymens deived fom he aids eceived by Spain (in housand of euos) Vaiable 990 a Toal value of subsidies 2,243,476 3,096,246 3,265,6 3,855,877 5,327,303 6,230,30 Toal diec paymens,784,669 2,637,439 2,806,805 3,397,07 4,606,055 4,830,977 Coupled diec paymens: Toal,784,669 2,637,439 2,806,805 3,382,893 4,472,095 4,63,063 Coupled diec paymens: cops,23,978,978,892 2,22,00 2,756,049 3,754,92 3,798,985 Coupled diec paymens: livesock 570,69 658, , ,844 77, ,077 Decoupled diec paymens (SFP) Se-aside paymens ,90 92,502 Ohe diec paymens ,78 44,769 07,43 Rual developmen policies 458, , , ,807 72,248,399,324 RDP financed fom EU budge 229,03 229,03 229,03 229,03 37,28 877,36 RDP financed fom naional budge 229, , , , , ,008 Less Favoued Aea N/A b N/A N/A N/A N/A N/A Toal value of subsidies 5,272,982 5,378,882 5,829,725 6,478,043 5,474,793 6,40,873 Toal diec paymens 3,749,466 3,999,285 4,087,724 4,95,637 4,077,849 4,353,238 Coupled diec paymens: Toal 3,445,583 3,629,94 3,672,629 3,858,463 3,988,334 4,264,93 Coupled diec paymens: cops 2,558,063 2,96,448 2,822,034 2,86,022 3,22,420 3,30,737 Coupled diec paymens: livesock 887,52 72, , ,44 865,94 963,94 Decoupled diec paymens (SFP) Se-aside paymens 23,075 40,306 40,649 66,424 67,99 62,637 Ohe diec paymens 80, , , ,750 22,36 25,669 Rual developmen policies,523,56,379,597,742,00 2,282,406,396,944,998,223 RDP financed fom EU budge 959, ,89,8,72,439, ,274,35,926 RDP financed fom naional budge 563, , , , , ,297 Less Favoued Aea N/A N/A N/A N/A 0 59, Toal value of subsidies 7,02,854 7,240,665 7,760,383 7,562,958 7,800,080 7,665,247 Toal diec paymens 4,908,992 4,809,448 5,028,778 4,670,394 4,777,268 5,20,558 Coupled diec paymens: Toal 4,66,679 4,553,308 4,995,907 4,649,30,47,60,80,69 Coupled diec paymens: cops 3,454,54 3,238,928 3,628,072 3,239,93 46,054,86,42 Coupled diec paymens: livesock,207,525,34,38,367,835,409,370,00, ,270 Decoupled diec paymens (SFP) ,282,8 3,294,005 Se-aside paymens 236, ,045 20,983 8,384 6,58 0,497 Ohe diec paymens 0,748 0,095,888 2,709 6,267 86,365 Rual developmen policies 2,037,769 2,324,770 2,599,069 2,772,634 2,88,59 2,328,000 RDP financed fom EU budge,294,882,47,685,65,896,743,628,662,785,030,600 RDP financed fom naional budge 742, , ,73,029,006,28,374,297,400 Less Favoued Aea 75,093 06,446 32,536 9,930 4,652 35,689 a The paymens of each yea ae fom he s of Decembe of he cuen yea. b N/A: no available. Souce: Own pefomance fom FEGA and MARM infomaion. ganed decoupled aids fom poducion in 2005, Spain, Geece, Finland, Fance and Nehelands adoped i one yea lae. Cuenly, he Euopean Commission (EC) has guaaneed and budgeed CAP unil 203. The SPS implies diec aids being eceived by fames. The SPS gans wo kinds of aids, coupled and decoupled, whose disibuion vaies in accodance wih he decision each couny makes. Spain has oped o paially apply he SPS fom he yea One pa of he aid is paid o fames as a

3 Valuaing single paymen enilemens: Spain 739 single paymen, while he second pa is paid as coupled paymens fo poducion, which ae only eceived if cops coninue o gow o livesock ae sill bed (see Table ). Decoupled aids have bough abou impoan changes in he developmen of he agaian seco. In paicula, he impac of land use and is poduciviy was modelled by Gohin (2006), Tane e al. (2007) and Goon e al. (2008), while he influence on land en was analysed by Robes e al. (2003). The objecive of his sysem was o assue ha fames incomes emained sable and ha he compeiiveness and he susainabiliy of Euopean agiculue impoved. Each couny membe has oped fo a diffeen sysem o esimae and make SPS paymens o fames (Kilian and Salhofe, 2008); hese paymens ae made by assigning enilemens o fames. One of he opions consiss in esimaing he SPS on he diec paymens ha he fame eceives duing a efeence peiod, which may involve diffeen levels of SPS fo each fame. This opion is known as a hisoical model. Fance, Pougal, and Spain, among ohe counies, have oped fo his model. Anohe opion fo esimaing he SPS involves calculaing he aveage of all he paymens a a naional o egional level (egional model). Finally, he hid opion is he mixed model which combines he pevious mehods fo esimaing paymens fo he diffeen egions in he same couny. As a esul of he applicaion of he SPS, a new agiculual asse has emeged: he enilemen. Fames can manage enilemens in vaious ways, fo insance: puchasing o selling hem wihou land, linking hem o land ade o ening he land. Howeve, i is compulsoy fo boh ownes and enans o jusify any kind of eligible land o eceive he enilemen paymen. Enilemens ae unquesionably a new inangible of an adminisaive naue ha is no linked o land (Caballe, 2008), which may be aded in a moe o less compeiive and anspaen make, and whose valuaion is a necessiy given is novel and special feaues. In addiion, enilemens may only be aded unde ceain condiions when hey have been, and can be, assigned only o hose fames who ae officially locaed in Spain; alhough hey may be aded beween egions, his pacice involves paying a penaly. Neveheless fames have o no only epo any ade enilemen bu also he eason why i has been aded o he Spanish Agaian Guaanee Fund (FEGA), hee is no obligaion o epo he make pice of he enilemens. Theefoe, such infomaion emains unknown. A he same ime, i is no a speculaive make given he consequences of he unceain fuue of enilemens afe 203. This may imply an adjusmen pocess wihin he agaian seco a consequence of no having o jusify lands o ade enilemens (Moeno- Péez and Oiz, 2008). Accoding o he FEGA (2007a), a oal of 505, (3.39%) of nomal enilemens, 24,535.0 (3.49%) of wihdawal enilemens and, (2.52%) of special enilemens, he aveage of which is 3.39%, wee ganed (aded o ened) in he peiod fom Febuay 2007 o 3 Sepembe Howeve, of he 505, nomal enilemens ganed, only 35, (26.7%) coesponded o aded enilemens as mos wee (44.6%) enals involving lands. The same occued wih he ansfes of wihdawal enilemens as only 5,033 (20.5%) wee owing o adabiliy easons of he enilemens, alhough hee was an even geae numbe coesponding o enals involving lands (2,495.85; 50.9%). On he ohe hand, 64.4% of wihdawal enilemens being ansfeed wee owing o adabiliy easons, while only 5% coesponded o enals. Afe analysing he saus of he enilemens make in Spain, we discove wo diffeen pas: he annual en eceived pe enilemen and he make value of he enilemen. As FEGA published ens each yea, ens ae ceain and known facs. Neveheless, hee ae nooious diffeences beween he aveage values of enilemens among he Spanish Auonomous Communiies (ACs). So he esuls and he facos ha deemine such diffeences ae ineesing o analyse. Seveal sudies have analysed he feaues ha deemine enal and land values (Gacia e al., 2004; Caballe and Guadalajaa, 2005), paiculaly he CAP subsidies eceived by fames (Lagekvis, 2005; Sala and Toes, 2007; Paon e al., 2008), and also some of hem have poposed a valuaion model in accodance wih hese feaues. Fuhemoe, accoding o Bead and Swinbank (200), hose bonds (enilemens), o which he owne confes he igh o eceive hese fuue compensaion paymens, will have a value which eflecs he make s Inangible asses may be of eihe an adminisaive naue, such as he milk poducion quoas, o a echnological naue, such as official ceificaes of oigin.

4 740 V. Caballe e al. / Span J Agic Res (2009) 7(4), pesen valuaion of hese fuue paymens. In his way, he make value of an enilemen is mos pobably he esimaion of he value of an enilemen ha could be aded in he fee make. By aking all his ino accoun, we see ha hee is a need o evaluae new enilemens and ha woks which cene on his appoach ae lacking. Consequenly, he main objecive of his pape is o popose a valuaion model o esimae he heoeical make value of SPS enilemens in Spain. The pupose of esimaing his value is wo-fold; on he one hand, i affods his make geae anspaency and efficiency while, on he ohe hand, i enables aids o be pu o bee use and, possibly, bee EU financing fo Spanish agiculue. Fuhemoe, i would help esolve he poblems elaed o valuing ual land in hose cases in which enilemens do no coespond o he land owne. This pape is sucued as follows: Secion focuses on he applicaion of he SPS and on he oigin of faming enilemens in Spain. Secion 2 analyses he diffeences in enilemen ens among he ACs. Besides, Secion 3 develops a valuaion model o esimae he heoeical value of he enilemens in he make, which akes his value as being simila o financial asses and secuiies. Secion 4 shows he eseach esuls of he aveage enilemen en in Spain in such a way ha he make value obained fom he enilemen is meely a mean naional value, which will vay in ems of he enilemen en in each case. Finally, Secion 5 pesens he main conclusions of he pape. Applicaion of he SPS in Spain In Spain, he oal diec paymens eceived by fames in 2006 and 2007 wee 4,777 and 5,02 million, especively. Of hese amouns, 68.7% (3,282,8) and 63.3% (3,294,005) wee eceived as decoupled aids, especively, hough he SPS each yea (see Table ). A single paymen is esimaed by he mean aid eceived duing he hee-yea peiod 2000/200/2002, wih some excepions: a) olive oil, (he 999/2000 campaign o he campaign); b) suga cane ( ); c) suga bee ( ); d) flax and hemp ( ). Given he consideable diffeences in he diec aids eceived by each seco and each AC duing he efeence peiod as a esul of he noable secoial and eioial diffeences in Spanish agiculual poducion, a hisoical model has been adoped. Likewise, his hisoical model has been adoped o mainain pa of he coupled aids in ode o face he isk of a moe o less genealised abandonmen of he faming aciviy owing o low poduciviy of dy cops and exensive cale aising. In ode o eceive enilemen paymens, fames have o jusify land. The suface aeas fo which SPS enilemens may apply ae hose fams whose lands ae used fo gowing cops and pemanen gazing, excep fo hose lands occupied by pemanen cops o foess o hose used fo aciviies ohe han agiculue. In Spain, appoximaely 75% of he uilized agiculual aea (UAA) may pu such enilemens o good use. The emaining 25% is made up of some 4.5 million hecaes which have no enilemens because hey ae eihe fallow o foage lands. Moeove, fames will eceive diec paymens if coss-compliance equiemens ae me. Fames mus comply wih he povisions of 8 Euopean Diecives (Diecive 782/2003/CEE; OJ, 2003) in he aeas of public, animal and plan healh, he envionmen and animal welfae, and in keeping land in good agiculual and envionmenal condiions (GAEC) (Annexe IV of his diecive). Moe ecenly, he Euopean Council Regulaion 46/2008 (OJ, 2008) has amended boh Euopean Council Regulaion 782/2003, which esablishes common ules fo diec suppo schemes unde he CAP as well as ceain suppo schemes fo fames, and Euopean Council Regulaion 698/2005 (OJ, 2005) on he suppo fo ual developmen hough he Euopean Agiculual Fund fo Rual Developmen (EAFRD). The amendmens cove mino cases of noncompliance wih he coss-compliance equiemens esablished in he CAP. In Spain, Royal Decee 2352/2004 (BOE, 2004) is he main legal ac ha addesses coss-compliance a a naional level. Seveal sudies ino he impac of Good Faming Pacices equiemens fo being eligible o paicipae in Euopean Rual Developmen Pogammes have been caied ou (e.g., Calaava e al., 2007). This sudy concluded ha he new envionmenal equiemens egading he SPS have a posiive effec on he adopion of consevaion pacices. Those enilemens deived fom he aids available fo suface aeas, and fom he bonuses and supplemenay aids obained by fams wih suface aeas, ae accouned as follows: enilemen = hecae o facion of hecae.

5 Valuaing single paymen enilemens: Spain 74 As egads supplemenay livesock bonuses and aids obained by fams wihou suface aeas, he numbe of enilemens is calculaed as so: numbe of enilemens = amoun of efeence/5,000. In his way, hee kinds of enilemens exis: nomal, special and wihdawal. The value of each enilemen will be calculaed by dividing he educed efeence amoun once he 3% desined o he Naional Reseve, and any ohe applicable discoun, have been deduced (applying Aicle 69 EC Regulaion 782/2003 and he financial discipline, fo example) by he numbe of enilemens. As Table 2 shows, he aveage value 2 of enilemens in Spain in he 2006 Campaign was , alhough hee wee many diffeences beween ypes of enilemens: The aveage value of compulsoy wihdawal of lands, o wihdawal enilemens (hough he diec aids eceived fo he compulsoy wihdawal of lands) was Afe he SPS was se up, he enilemen fo he compulsoy wihdawal of hebaceous cops (ceeals, oil seed cops and poein cops) was se a 0%. In 2008, he EC poposed o se he pecenage of compulsoy wihdawal of lands fo fohcoming sowing imes a 0% as a eacion o he siuaion in which he ceeal make is. The aveage value of each eligible hecae, o nomal enilemen, was The aveage values in hose siuaions subjeced o special condiions, ha is, fo special enilemens Table 2. Assigned enilemens duing 2006 and 2007 Numbe Numbe Paymens b Aveage value Auonomous Kind of of ganes of enilemens ( ) pe enilemen ( ) communiy enilemens a Andalusia E 6,96 5,46 9,46 6,989 24,279,572 7,535,36 2,579 2,509 N 264, ,324 3,9,02 3,237,034,227,497,68,234,623, R 0,65 0,807 97,224 98,878 20,573,854 20,568, Toal 270,598 27,97 3,297,742 3,342,900,272,35,07,272,727, Aagon E,930,203 3,58 2,46,970,96 8,475,66 3,403 3,508 N 50,604 49,583,232,409,233,57 27,846,088 27,4, R 0,600 0,34 76,070 75,948,825,8,625, Toal 52,343 50,646,3,997,3, ,64,40 29,242, Asuias E 4,058,736 4,88,999 8,780,767 2,790,479,799,396 N 9,66,502 20,260 22,049 28,47,365 33,78, R Toal 3,229 2,984 25,4 24,048 37,98,3 36,572, Baleaes E , , N 4,893 4,957 84,780 84,557 4,430,652 4,302, R ,563 2, , , Toal 5,796 5,766 88,285 87,978 5,536,988 5,278, Canabia E 2,324,278 3,354,840 8,90,365 4,703,535 2,657 2,556 N 3,264 4,25 34,094 36,6 6,49,658 20,272, R ,04 20, Toal 5,557 5,465 37,545 38,098 25,423,063 24,996, Casile-La Mancha E 3,49 2,504 4,88 4,057 4,808,489 2,50,358 3,034 3,084 N 29,78 30,99 2,734,430 2,767,29 388,26, ,740, R 6,477 7,078 62,723 69,668 24,920,624 25,598, Toal 32,64 32,454 2,902,034 2,940, ,946,00 433,849, Casile-Leon E 4,877 2,370 7,52 3,64 20,787,686 0,968,988 2,907 3,03 N 95,684 94,492 3,57,924 3,547,44 573,564, ,366, R 3,36 29, ,78 269,04 42,09,359 4,728, Toal 00,228 96,624 3,792,254 3,89, ,46, ,063, In colloquial language, he value of enilemens is elaed o he annual income of he enilemens. This concep diffes fom he make o fai value of enilemens which would be he pice an enilemen would be mos pobably aded a in he make.

6 742 V. Caballe e al. / Span J Agic Res (2009) 7(4), Table 2 (con.). Assigned enilemens duing 2006 and 2007 Numbe Numbe Paymens b Aveage value Auonomous Kind of of ganes of enilemens ( ) pe enilemen ( ) communiy enilemens a Caaluña E,46,55 2,535 2,72 7,92,072 8,425,283 3,25 3,07 N 53,255 55,37 70, ,404 79,87,50 8,625, R 4,95 4,274 20,389 20,702 4,3,07 4,08, Toal 54,67 56, ,4 727,86 9,905,68 94,58, Exemadua E 4,04 2,625 5,382 3,476 2,990,36 7,973,538 2,44 2,294 N 70,843 72,072,770,645,777, ,875, ,09, R 5,469 5,484 40,28 40,367 6,776,56 6,724, Toal 74,542 74,394,86,55,82, ,64, ,807, Galicia E 8,045 7,49 9,406 8,733 7,336,678 5,979,305,843,830 N 38,346 38,44 326, ,276 89,49,32 89,038, R ,44 23, Toal 44,927 44, ,56 332,28 06,509,953 05,04, Madid E ,600,477,492,3 3,03 3,077 N 7,347 7, , ,328 25,373,687 26,036, R ,735 6,732,33,573,7, Toal 7,825 7,79 26,46 23,545 29,07,738 28,646, Mucia E,265,49 2,48 2,05 6,69,748 6,66,68 3,5 3,43 N 8,684 8,784 87,046 88,00 20,460,586 20,627, R ,554 4, , , Toal 9,888 9,869 93,748 94,694 27,674,77 27,766, Navaa E, ,40,48 5,983,308 4,574,907 2,796 3,089 N 7,467 7, , ,89 58,695,367 59,784, R 2,772 2,745 6,269 6,303 3,236,283 3,94, Toal 8,734 8, ,66 325,97 67,94,957 67,553, País Vasco E 5,009 3,894 5,909 4,757 8,090,443 7,079,52,369,488 N 6,739 7,757 23,73 24,438 22,794,503 23,738, R, ,873 4,854,87,289,64, Toal,75,597 34,495 34,049 32,072,235 3,98, La Rioja E ,922,834,507,922 3,27 3,358 N 6,646 6,668 7,654 6,400 6,380,93 6,739, R ,64 2, ,97 537, Toal 6,978 6,889 20,90 9,482 8,852,962 8,785, Valencia E,36,50,926,740 5,434,7 4,883,0 2,82 2,806 N 53,265 53,344 87,59 85,738 40,3,454 39,830, R ,03 2,04 342, , Toal 54,487 54,397 9,548 89,580 45,908,28 45,050, TOTAL E 47,454 34,56 65,043 47,74 59,206,869 6,09,3 2,448 2,432 N 820,48 828,934 4,94,229 5,052,237 3,246,97,99 3,289,757, R 85,050 84,28 703,665 74,56 7,742,37 7,674, Toal 864, ,700 5,709,937 5,84,53 3,523,46,385 3,523,523, a E: Special enilemens, N: nomal enilemens, R: wihdawal enilemens. b This amoun should be educed a 4% of he modulaion and «ohe easons» fo obaining he eal paymens of he SPS in 2007 shown in Table. Souce: Own pefomance fom daa povided by FEGA (2006, 2007b). (fo livesock bonuses eceived by fams wihou a suface aea basis), was 2, In 2006, hee wee a oal of 864,078 beneficiaies who eceived aids, mos of which wee nomal enilemens ha amouned o 820,48, while hee wee 859,700 beneficiaies in The oal numbe of definiive enilemens in he 2006 Campaign was 5,709,937, of which 65,043 coes-

7 Valuaing single paymen enilemens: Spain 743 ponded o special enilemens, 4,94,229 o nomal enilemens and 703,665 o wihdawal enilemens. In 2007, he oal numbe of definie enilemens ose slighly o 5,84,53. Non-usage of he enilemens assigned in 2006 was 2.94%, a pecenage which wen down o.2% in Few vaiaions wee obseved in The aveage value of he assigned enilemen was slighly lowe, The same occued wih he special enilemens and he wihdawal enilemens whose values wee and 2,43.69, especively. On he ohe hand, he value of he nomal enilemens inceased slighly o he amoun of Lage diffeences exis among he ACs, as Figue shows. The aveage enilemen value in Spain in 2006 was The lowes enilemen value wen o he Madid Communiy, 34.47, while he highes enilemen value of was eceived in Andalusia. Canay Islands ae no included a Figue since hey ae no affeced by he SPS (see Table 2). A simila siuaion ook place wih nomal enilemens, whose lowes and highes values wee and 2.47, especively, fo he same wo ACs. This siuaion was seen once moe in The aveage value of enilemens was 222.8; he highes value was noed in Andalusia ( ) while he lowes was epoed in Madid ( 34.5). Wih egad o special enilemens, Aagon eceived he highes aveage values wih 3, in 2006 and 3,508.4 in 2007, which is possibly a esul of his AC having a highly developed livesock seco. Mehod and souces of infomaion The mehodology used o explain he facos ha deemine he diffeences of enilemen en (R) among he ACs was Peason s coefficien coelaion. In addiion, he fai value of enilemens (P) (bonds) was esimaed by applying he Pogam Evaluaion and Review Technique-Time (PERT-Time) mehodology (Suáez, 2007). This mehod applies diffeen disibuion funcions: ecangula, iangula, bea and, moe ecenly, apezoidal (Heeías e al., 999, 2003; Van Dop e al., 2007). This value (P) will depend on he possession, o no, of land. So, hee ae wo possibiliies: If an applican does no own land: P = 0, so he en (R) is null. If an applican owns he land: he financial feaues of he enilemens ae simila o bonds. Financial RO6 = RO7 = RO6 = 35.5 RO7 = 59.3 RO6 = RO7 = RO6 = RO7 = RO6 = RO7 = 43.8 RO6 = RO7 = RO6 = RO7 = RO6 = RO7 = 29.8 RO6 = 2.47 RO7 = 29.9 RO6 = RO7 = RO6 = 54. RO7 = RO6 = 4.97 RO7 = 43.0 RO6 = 24.0 RO7 = RO6 = 70.2 RO7 = 69.5 RO6 = Yea 2006 RO7 = Yea 2007 RO6 = RO7 = 38.4 RO6 = RO7 = > <80 Figue. Disibuion of he aveage value of enilemens (R) by Auonomous Communiies in 2006 and 2007.

8 744 V. Caballe e al. / Span J Agic Res (2009) 7(4), asses exis whee ens ae known and consan. The heoeical make value of he enilemen may be expessed by he expession known in he financial wold of capialisaion of ens (Suáez, 2007): R P = ( + k ) + R 2 + k [] whee P = he heoeical value of he enilemen in yea o a he ime of valuaion; R i = en 3 o eceive in yea I; P n = he expeced value of he enilemen aded in yea n; n = he numbe of yeas of he enilemen has been possessed; k = he inees ae, which is consan evey yea. As he enilemen en, R, is pacically consan evey yea and given he hypohesis ha he enilemen is in he ownes hands unil i expies, equaion [] would be as follows: n n P = R * = R * ε i [2] ( + k) i i= i= whee ε is he discoun ae. In accodance wih he cuen CAP egulaion, en R is only known and ceain unil 203. Afe 203, any isk will have o be consideed. I is possible ha he enilemen value will decease, o we may even be pessimisic and conemplae he CAP disappeaing, which would imply fames no eceiving any aids. Theefoe, he annual en o eceive fo enilemens is consideed a andom vaiable D afe 203. The expession [2], heefoe, is: P = R * ε R * ε D * ε D + D * ε D * ε 203 +v n ( ) R + P n n 2 ( + k ) = n R i ( ) i if P = D * ε D * ε v if 204 n [3] whee v is he numbe of yeas he enilemen is expeced o coninue beyond 203, ha is, he esimaed peiod of isk. R is pefecly deemined and D is he andom vaiable D unde he hypohesis of a ecangula disibuion funcion whee all he possible values ae P n = + i= + k + k ( ) n p beween he minimum and maximum values (D,D 0 ). Theefoe, hey have he same pobabiliy (Suáez, 2007). Such a disibuion has he following densiy funcion: f ( D )= 0 if D p D f ( D )= f D 0 p D ( D )= 0 if D 0 D [4] The mean and he vaiance ae shown by he following expessions: E D = D p o + D 2 if D p < D 0 < D ( ) 2 [5] [6] σ 2 ( D )= D 0 p D 2 Fom a financial pespecive, faming enilemens may be consideed bonds. This similaiy makes i convenien o capialise annual enilemen ens a he same ae of inees as bonds (0-30 yeas). In he same way as evaluaing land, he inees ae while evaluaing enilemens may vay in he sho o long em (Wong e al., 2008). Accodingly, he inees ae isk consideed is esimaed as a andom vaiable, k, which may vay in he numeical ange (k p,k 0 ) in accodance wih a densiy funcion f(k ) (Péez, 992, 997). Obviously, he discoun ae ε = will also + k be a andom vaiable, and i will pesen values beween he numeical ineval. + k, 0 p + k In his paicula case, iangula disibuion m was consideed followed by k wih a modal k value as hee was enough infomaion available o model i, i was moe opeaive han he bea disibuion (Romeo, 977; Gacía e al., 999; Caballe, 2008) and fis he hisoic values bee han he ecangula disibuion. If discoun ae k is adjused o he iangula model, is densiy funcion is: 3 In financial ems, he hypohesis ha incomes and paymens ae a he end of he yea has always been consideed. This explains why he en of he fis yea is updaed.

9 Valuaing single paymen enilemens: Spain 745 f ( k )= f ( k )= [7] Péez (997) showed ha he densiy funcion of he discoun faco ε o be as follows: f ( ε )= 0 if ε < 0 + k if + k ε m p + k f ( ε )= 0 if ε > p + k The mean and vaiance may be expessed as: E ε = 2 k 0 p k σ 2 f ( k )= 0 if k p < k 2(k k p ) (k m k p )(k 0 k p ) if k 2(k k 0 ) (k m k 0 )(k 0 k p ) if k m k 0 < k f ( k )= 0 if k 0 > k 2 f ( ε )= (k 0 k m )(k 0 k p ) if + k <ε 0 2 f ( ε )= (k m k p )(k 0 k p ) k p + k m k Ln + k m p p + k ε = 2 k 0 p k m + k k 0 + k 0 m k Ln + k 0 m + k k m p k Ln + k m p + k k 0 k Ln + k 0 m m + k 2 k 0 + k 0 p k k 0 m k Ln + k 0 m + k k p + k m k Ln + k m p p + k p ( k 0 (ε ) 2 ) ε 2 < k k m (ε ) 2 [8] [9] The infomaion souces and he daa used in he sudy o explain he nomal enilemens en fo 2006 and 2007 pe AC have been obained fom diffeen souces. The egessions of he empiical sudies conduced o accoun fo land value in Spain, as cied ealie, in he Unied Saes (Xu e al., 993; Banad e al.,997; Shi e al., 997) include vaiables elaed o he fams chaaceisics (size), some which accoun fo agiculual poduciviy (empeaue, ainfall), and ohes wih no agiculual influence given hei possible alenaive uses (ouism, demogaphic pessue, locaion), and ohes of an economic kind (inflaion, axes, salaies). Consequenly, he daa have been divided ino fou goups of vaiables, climaic feaues, economic conex, locaion and demogaphy, which ae shown as follows: Climaic feaues Rainfall (X ): he aveage annual ainfall (in mm) of each AC fo he peiod This infomaion was obained fom he Food and Agiculue Saisics Yea Book in Spain of 2006, published by he Spanish Minisy of Agiculue, Fishey and Food ( MAPA, 2006a). I has a consan value fo each yea. Aveage empeaue (X 2 ): measued by he annual empeaue (in C) of each AC ove he peiod This infomaion was also obained fom MAPA (2006a). I is a consan value fo each yea. Economic conex Pice of non-subsidised housing (X 3 ): a egisy of he pice pe squae mee fo he hid quae of 2006 and 2007 of each AC. This infomaion was obained fom he Spanish Minisy of Housing ( Beds in hoels (X 4 ): a egisy of he numbe of esimaed beds in hoels of each AC fo 2006 and The daa wee obained fom he Spanish Naional Saisics Insiue (INE, Numbe of apamens (X 5 ): a egisy of he numbe of esimaed beds in ouis apamens in each AC fo 2006 and The daa wee obained fom he INE. Consumes pice index (X 6 ): he vaiaion of an annual index of consume pices fo each AC, fo 2006 and The daa wee obained fom he INE.

10 746 V. Caballe e al. / Span J Agic Res (2009) 7(4), Inees ae (X 7 ): is published by he Excheque ( Occupaional populaion in he agaian seco (X 8 ): he ae of employmen in each AC. I is pesened as a pecenage which is calculaed as he oal numbe of he woking populaion in he agaian seco ove he oal numbe of he woking populaion fo each AC in 2006 and The daa wee obained fom he INE. UAA (X 9 ): his is calculaed in hecaes fo each AC. The daa wee obained fom he INE. Rual popey ax /UAA (X 0 ): a oal ax liabiliy paid pe hecae of he UAA in This value was esimaed by he infomaion povided by he Sae Popey Regisy of he Spanish Minisy of Economy and Finance and INE. Each AC pesens a value. Land value pe cop (X,,X 8 ): he aveage land value in each AC was obained fom he suvey of land pices published yealy by MAPA (2006b, 2007). Cops included dy lands (X ), iigaed lands (X 2 ), dy land-ansfomed vineyads (X 3 ), iigaionansfomed vineyads (X 4 ), died fuis gown on dy lands (X 5 ), iigaion-ansfomed olive goves (X 6 ), pasues (X 7 ), and meadowlands (X 8 ). Size of fams (X 9 ): his daa was obained by dividing he UAA by he numbe of fams (MAPA, 2006c). Geogaphical locaion Coaslines (X 20 ): calculaed by he numbe of kilomees of coasline in each AC. Suface aea of he ACs (X 2 ): he suface aea of each AC is pesened as km 2. Resuls The saisically significan vaiables of 99% and 95% ove he enilemens values ae shown in Table 3. The non-significan vaiables have been omied. The pice of olive goves shows a high coelaion wih he ens of nomal enilemens fo he yeas 2006 and 2007 and, o a lesse exen, wih he pice of iigaion land. This influence is due o he fac ha he SPS-ganed enilemen ens ae esimaed by consideing hisoical subsidies which wee mainly based on land poduciviy. The second faco in his coelaion is he ual popey ax. These axes ae highe on he moe poducive lands and enilemen values ae also highe. In hid place we find hoel occupancy. The ACs wih moe ouism, as a nonagiculual influence, moe coasline and wame empeaues, which lead o geae land poduciviy, ae chaaceized by highe aveage values, jus as he cied lieaue depics. Finally, he suface aea of each AC has a posiive effec on he aveage value of nomal enilemens, alhough his happens o a lesse exen in Andalusia and Casile-Leon. In ems of esimaing he heoeical make value of enilemens in Spain, i was assumed ha one enilemen had an annual aveage en value of (see Table 2). The minimum, maximum and modal values of he discoun ae have been esablished a 4.87%,.45% and 5.5%, especively, accoding o he hisoical daabase fom published by he Excheque. A isk peiod ime hoizon is also consideed and consiss of 8 addiional yeas beyond 203, which akes us o 202. Demogaphy Populaion Densiy (X 22 ): he numbe of inhabians in he AC divided by he suface aea of each AC pesened as km 2. This infomaion was deived fom he INE and was only available fo 200 since faming censuses ae done only once evey 0 yeas. The values of he annual ens pe enilemen (X 23 ) ae hose peviously shown in Table 2. Finally, a maix was ceaed wih 23 columns o vaiables, and 32 ows o obsevaions coesponding o he 6 ACs affeced by he SPS in he yeas 2006 and Table 3. Resuls of he Peason s coelaion coefficien wih he «Nomal Enilemens» vaiable fo 2006/2007 Explanaoy vaiable Coefficien Value of olive goves 0.82** Rual popey ax 0.72** Beds in hoels 0.643** Coaslines 0.62** Value of iigaion land 0.439* Suface aea of he ACs 0.436* Aveage empeaue 0.430* Numbe of apamens 0.43* *,**: The coelaion is significan a he level of 0.05 and 0.0 especively (bilaeal).

11 Valuaing single paymen enilemens: Spain 747 Table 4. Developmen of he heoeical value of he enilemen elaed o he annual aveage en of and a ime hoizon consideed (202) Yeas Ren (R and D) Value in Sandad Vaiaion of he enilemens Vaiance of P deviaion coefficien (P) of P (%) , , , , , , ,09, , , , , , , , , , The sochasic independence of he D and ε vaiables is assumed, whose means and vaiances ae known: 09 and fo he means and 3,933 and fo he vaiances, especively. These figues have been esimaed accoding o he expessions [5], [6], [9] and [0], and by applying he known elaionships fo he addiion and poduc of andom vaiable (see Table 4 fo he esuls). The heoeical aveage make value of a nomal enilemen in Spain in 2006 (he fis yea of enilemens) was,77, which educes ove ime given is hypoheical exisence unil 202, and whose value is he same as he en of ha yea. In conas, he isk inceases ove ime wih a vaiaion coefficien fom % o 58% in 202. Obviously, he value of hose enilemens whose annual en is highe han he annual aveage en will be highe han he esimaed value shown in Table 4, and vice vesa. Conclusions The CAP of 2003 has mean an impoan change in he way diec aids ae eceived. The SPS consiss in assigning enilemens o fames which become a subsidy o annual en. The single paymen mehod adoped has been he hisoical model. Fames eceive a single paymen pe land. The single paymen is esimaed by he mean aid eceived duing he heeyea peiod 2000/200/2002, and impoan diffeences ae noed among he ACs. As a esul of he SPS, he ACs wih moe olive goves and iigaed lands, geae ouis developmen and wame empeaues pesen highe aveage enilemen en values. In conas, he fac ha land enilemen became independen has bough abou a new make of enilemens whose heoeical value can be esimaed analogically wih esimaions of bonds. The applicaion of he PERT mehod has convenienly inoduced a isk faco ino he poposed valuaion model which is pesened in wo diffeen ways: fisly in elaion o he enilemen en due o he unceain fuue of he CAP afe 203, and secondly in elaion o isk concening he inees ae in he bonds make of ecen yeas. Consequenly, he heoeical make value of he enilemen deceases ove ime and is value will depend on no only he en associaed wih he enilemen, bu also on he ime hoizon consideed. Acknowledgemens The pesen wok has been developed by aking he iniial poin of he Pojec «Sudy on he Funcioning of Land Makes in he EU membe saes unde he Influence of Measues applied unde he Common Agiculual Policy» caied ou by he EC in which

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