agriregionieuropa Methodological and practical solutions for the evaluation of the economic impact of RDP in Latvia M.oec. Armands Veveris Latvian University, PhD student; Latvian State Institute of Agrarian economics 122 nd European Association of Agricultural Economists Seminar Evidence-Based Agricultural and Rural Policy Making Methodological and Empirical Challenges of Policy Evaluation February 17 th – 18 th, 2011, Ancona (Italy) This work has been supported by the European Social Fund within the project «Support for Doctoral Studies at University of Latvia». associazioneAlessandroBartola studi e ricerche di economia e di politica agraria Centro Studi Sulle Politiche Economiche, Rurali e Ambientali Università Politecnica delle Marche

agriregionieuropa 122 nd EAAE Seminar, February 17 th – 18 th, 2011, Ancona (Italy)  The aim of the study is to analyse the methodological and practical solutions which are introduced to evaluate the impact of the RDP in Latvia First level – The following objectives are set: To analyse the organization of RDP evaluation process To characterize the information sources used for the evaluation To investigate the methodological solutions applied in the Mid-term evaluation The aim and objectives of the study

agriregionieuropa 122 nd EAAE Seminar, February 17 th – 18 th, 2011, Ancona (Italy) The present structure of the evaluation process of RDP in Latvia  Managing authority (tasks, receiving results)  Independent evaluator (organization of evaluation process, contracts with experts, data collection, obtaining and reporting of results)  Experts (in different fields – agriculture, forestry, environment, qualtiy of life etc.) – analysis on specific fields

agriregionieuropa 122 nd EAAE Seminar, February 17 th – 18 th, 2011, Ancona (Italy) The data sources for evaluation  The main data source for RDP beneficiaries: Rural Support service (support managing institution)  FADN (additional source for RDP beneficiaries (more detailed information) + for non-beneficiaries (source for control groups in agricultural measures)  Sources for general information: Central Statistical Bureau; Ministries and their institutions  Qualitative sources: surveys, interviews, focus groups, expert findings

agriregionieuropa 122 nd EAAE Seminar, February 17 th – 18 th, 2011, Ancona (Italy) The basic indicators & questions for the evaluation of Measure no.121 Type of indicator 121Modernisation of Agricultural holdings Input EUAmount of public expenditure realised Input EU Additional state funding Question EU1To what extent have supported investments contributed to a better use of production factors on agricultural holdings? In particular, to what extent have supported investments facilitated the introduction of new technologies and innovation? Output EU11Number of farm holdings that received investment support Output EU12Total volume of investments Output LV8The number of supported farms in which the total related costs of the received support exceed EUR 600,000 during the programming period Question EU2To what extent have supported investments enhanced market access and market share of agricultural holdings? Result CES3Net turnover increase in the supported farms Result CES5Market share of the supported farms in Latvia Question EU3To what extent have supported investments contributed to an enduring and sustainable activity of agricultural holdings? Result EU3Number of holdings introducing new products and/or new techniques Result EU2Increase in gross value added in supported holdings/eneterprises Result LV2Floor space of the newly erected or the renovated buildings Result CES4The ability of the investment to create value added [additional gross value added per one investment unit in the supported enterprise projects] Question EU4To what extent have supported investments contributed to improving the competitiveness of the agricultural sector? Impact EU1Economic growth [Net additional value added expressed in PPS] Impact EU3Labour productivity [Change in Gross Value Added per full-time equivivalent (GVA/FTE)] Question CES5How has the support affected the farm diversification in agriculture? Result CES6Changes in the production structure of the supported farms

agriregionieuropa 122 nd EAAE Seminar, February 17 th – 18 th, 2011, Ancona (Italy) Groupings for analysis of indicators  Regional groupings (regions, counties)  Kind of specialization (types of agricultural branches where the projects are realised)  Size groupings (ESU or physical size, net turnover)  Gender, age groups etc.

agriregionieuropa 122 nd EAAE Seminar, February 17 th – 18 th, 2011, Ancona (Italy) Calculation of net changes in the Gross Value Added in Measure nr.121 No.of projects sup- ported Value of GVA Indicators Base group - Field crops (LVL,average per farm) Base group - Dairy farms (LVL,average per farm) Base group - Other farms (LVL,average per farm) Base group – Total (weighted, LVL per farm) Gross changes of GVA per year: Average per base group farm (weighted, LVL) x Total in base group (thsd.LVL) x Total in base group (thsd.EUR) x Total at supported farms (thsd EUR) x Net growth of GVA (supported minus base, thsd EUR) x

agriregionieuropa 122 nd EAAE Seminar, February 17 th – 18 th, 2011, Ancona (Italy) Number of farms in different size groups: beneficiaries and non-beneficiaries in Measure no.121 (in FADN data base)

agriregionieuropa 122 nd EAAE Seminar, February 17 th – 18 th, 2011, Ancona (Italy) Evaluation of the indirect effects  According to CMEF guidelines, the following indirect effects should be evaluated: – double counting, deadweight, leverage effect, substitution, displacement, multiplier effect It is necessary to develop a methodology  Double counting – it is planned to prevent the significant effect at the stage of selection of the group.  Deadweight – is precluded with creating the base group. Also estimations are done to evaluate this effect.

agriregionieuropa 122 nd EAAE Seminar, February 17 th – 18 th, 2011, Ancona (Italy) Evaluation of the indirect effects (2)  Substitution effect – the potential approach has been considered theoretically, but it has not been approbated in practice yet.  Displacement effect – The theoretical approach is developed. In practice, at MTE distribution of support through different regions is accented.  Multiplier effect – Due to lack of input-output tables, the simplified approach is used. The effect is calculated for a rural territory, taking into account part of the additional expenses what stay in rural territories. Evaluated at % level of additional Intermediate Consumption of support beneficiaries.

agriregionieuropa 122 nd EAAE Seminar, February 17 th – 18 th, 2011, Ancona (Italy) The main problems in evaluation of RDP  The lack of consistent data – The measures started some years ago, so is very difficult to do some changes in data range; also many of the basic indicators are not collected; small number of farms in samples does not allow to use specific methods  The lack of experience – There was no Rural Support Evaluation System in Latvia before RDP  Specific methods not approved in Latvia – The methods recommended in Guidelines are very specific, so there is a lack of specialists who knows those

agriregionieuropa 122 nd EAAE Seminar, February 17 th – 18 th, 2011, Ancona (Italy) Conclusions  By implementation of the RDP a permanent evaluation system is developed  A system of indicators has already been developed in Latvia  The principle of net effect evaluation is currently approbated in Latvia (in agricultural measures)  The research was performed to find out the potential solutions for evaluation of indirect effects  It is planned to continue the work on improving the current approaches

agriregionieuropa 122 nd EAAE Seminar, February 17 th – 18 th, 2011, Ancona (Italy) Thank You for attention!