Assessing long-term effects of CAP investment support on indicators of farm performance

Abstract

In this study of Swedish farms from 2007 to 2016, we estimate the effects of investment support from the Common Agricultural Policy on indicators of farm performance, focusing on long-term effects. To isolate the impact and alleviate problems of selection bias, we employ a counterfactual empirical design using Coarsened Exact Matching and dynamic panel fixed-effects estimations. The average treatment effect on the treated estimates show a positive and significant long-term improvement of farm performance with regard to productivity and turnover. However, the results indicate significant time lags between investments and accumulated observable effects, as we find most short-term effects of the subsidy to be insignificant.