Modelling the effect of EU policy reforms on farm investment behaviour

The objective of this paper is to analyse farm strategies and investment behaviour in a sample of selected Italian farm-households facing different scenarios, with a particular focus on the effects of the 2003 CAP reform. Models were built for individual households using multi-criteria dynamic programming, including investment choice. A total of 24 farms were selected for modelling, all located in Emilia Romagna (Italy). The simulations show a strong effect of both policy and markets scenarios on household investment, though the latter seems more relevant than the former. However, decoupling itself shows minor effects in the majority of cases. The models offer useful insights about the mechanisms of adaptation and their implications for the effects of policies. The main drawbacks are in the heavy data collection and computational requirements, and in the related difficulties to achieve a satisfactory degree of representativeness.