Agrarwirtschaft 56 (2007), Heft 7
Figure 4. Parameterisation of EU co-financing and lump-sum
M6 Level of lump-sum
0 20 40 60 80
100
19,3
Level of EU co-financing
M4
Level of lump-sum
24,2 32,2 40,7 52,9
68,6
20 40 60 80 100
Level of EU co-financing
M1 General extensive grassland use
M2 Specific extensive grassland use - sheep
M3 Specific extensive grassland use - cattle
M4 Organic farming
M5 Special cultures
M6 Management of grassland
M7 Management of ancient orchards
M8 Management of cropland
M9 Management of set aside land
Level of EU co-financing
—•—Budget volume (mio. €) subject
to the level of EU co-financing (%)
Source: own calculations
M9
19,3
Level of lump-sum
24,2 32,2 40,7 52,9 68,6
0 20 40 60 80 100
Level of EU co-financing
—A— Budget volume (mio. €) subject
to the level of EU lump-sum (mio. €)
financing level from about
20% to 80%, the budget is
raised to the upper bound of
15 Mio. €.
In order to analyse the inter-
relations between the meas-
ures more closely, figure 5
illustrates the parameterisa-
tion of the EU co-financing
level and of the correspond-
ing lump-sum scenario of
selected measures within one
diagram. M2, M4, M8, and
M9 are not displayed in this
figure, as there is no differ-
ence in the budgets measures
between the co-financing
and the lump-sum scenario.
The budgets of the remain-
ing five measures are repre-
sented in per cent of the
respective upper bounds.
For the co-financing sce-
nario, the figure shows a
clear trade-off between the
VNS measure M6 on the one
hand and the MSL measures
M1 and M3 on the other
hand in the range of about
55% to 80% of EU co-
financing level. Starting
from a 55% EU co-financing
level, with increasing exter-
nal funding M3 is substi-
tuted by M6. For M5 and
M7 there is no trade-off with
respect to the other measures
and between the measures
themselves and the picture is
more simple. As discussed
for figure 4, these measures
switch from zero to a 100%
financing level at around
50% EU co-financing.
The results of the lump-sum
parameterisation also show a
clear trade-off between M6
For the measures M1, M3, M5, M6, and M7 there is a dif-
ference in funding between the co-financing and the lump-
sum scenarios. M5 and M7 are not financed for lower
budget volumes in both scenarios. They switch to the upper
bound above about 50% EU co-financing level, whereas the
same switch occurs under lump-sum scenarios only at
higher financial volumes. The figure shows a similar pic-
ture for M6. Therefore, for these measures the multi-level
co-financing system increases the incentives at lower budg-
ets. With respect to M1 and M3 these measures would not
be financed at all (M1) or at lower levels (M3) under the
lump-sum scenarios, whereas they receive a considerable
priority under the co-financing scenarios for specific co-
financing levels. M1, thus, receives a budget between about
40% and 70% of EU co-financing. For M3, from a EU co-
and M3 but this trade-off already occurs at lower financial
volumes. M6 starts to be financed with a total financial
budget of about 22 Mio. € and above. When the measure
reaches its upper bound at a total financial volume of about
45 Mio. €, M3 starts to be financed again and M5 and M7
are financed as well.
In order to analyse to what extent the multi-level co-financing
system distorts the financing of measures as compared to an
equivalent lump-sum scenario, figure 6 displays the values
of the objective function for both scenarios at different co-
financing levels and lump-sum financial volumes respec-
tively.
As can be seen in figure 6, the values of the objective func-
tion are lower under the co-financing scenario than under
302
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