Spillover Effects of CAP Greening Measures on the Economy and Biodiversity of Regional Europe: Evidence from Greece

This study investigates the impact of the 2013 CAP reform related to green payments on the economy and biodiversity of rural Greece. As the literature had addressed only the impact on the agricultural sector, a regional input-output model was constructed to capture the direct and indirect effects of CAP greening on output, income and employment generation for a NUTS-2 region throughout the last implementation period 2013-2020. Input-output modelling was selected for impact analysis as it is suitable for short- and mid-term evaluations in a quick and easy manner. The Shannon’s diversity and evenness indices (SDI, SEI) were estimated to determine the effect of green payments on crop diversification in the studied period. Empirical results imply that while farmers’ net income decreased, green payments had a minor, yet positive, spillover effect on the regional economy and record on average 0.86% output growth, 0.65% income increase, and 0.43% more jobs created. Additionally, jobs created due to CAP greening provided resilience and a standard share of total regional employment, especially in times of crisis. The main goal of biodiversity increase is slightly achieved as SDI and SEI increased by 7.6% from 2016 to 2019. Further research is needed on the dispersion of income of Common Agricultural Policy payments in rural areas, particularly for those vulnerable to climate change.