Stabilizing European Union farm incomes in the era of climate change

Abstract

No reliable supports protect European Union (EU) farmers from the catastrophic risks arising from extreme weather events, which are expected to increase in frequency and severity due to climate change. We compare alternative EU safety net policies to reduce farm income downside risks, which are transparent, predictable, and fair and operate with indices on an EU Member State (MS) level. Simulations with a tailored global model of a series of historic yield shocks as observed over past decades serve as a test bed to quantify the costs and benefits of these policies across EU MS using various risk metrics. The results highlight properties of and rankings among these polices useful for guiding future policy design and assessment.