The purpose of this dissertation is to analyze the adequacy and policy effects of the public interest direct payment system. The major findings are as follows. First, a cluster analysis on the adequacy of the direct payment scheme for small scale farms reveals that the current standard which is set ...
The purpose of this dissertation is to analyze the adequacy and policy effects of the public interest direct payment system. The major findings are as follows. First, a cluster analysis on the adequacy of the direct payment scheme for small scale farms reveals that the current standard which is set as 0.5 ha or less fails to match the actual characteristics of small scale farms. The result suggests that there is a high likelihood that a sizable number of small scale farms can be excluded if the direct payments are made based on the current policy standard.
Second, the hedonic price model and the present value theory were employed to analyze the validity and appropriateness of applying different payment unit between the agriculture promotion areas and non-promotion areas. The analysis was conducted by setting different direct payment unit prices according to whether the farmland is part of the agriculture promotion area or not. The findings from the analysis show that the land price of farmlands in the agriculture promotion area are relatively lower than those in the non-promotion areas.
The difference in farmland prices between the two regions can be interpreted as the effect of lowering the average asset value caused by the designation of the agriculture promotion area. Therefore, the current direct payment system that sets a higher unit price for farmlands within the agriculture promotion areas as a financial support measure to lessen the gap due to regulation can be seen as resonable in terms of equity. Nonetheless, the result of the analysis on the adequacy of the unit price of the direct payment between the agriculture promotion areas and non-promotion areas based on the present value theory suggests that the unit price for the former is still comparatively low.
Third, the values of public goods provided by paddy and upland fields are evaluated using the contingent valuation method and the replacement cost method. The results reveal a substantial gap between public values created by paddy fields and those by upland fields. In terms of specific functions such as environmental preservation, amenity provision, and food security, paddy fields produced greater public values than upland fields. The finding suggests that policy parameters such as the payment unit price need to be determined with a deliberate consideration of the public values created by multi-functionality of agriculture.
Forth, As a result of analyzing the income effect under price uncertainty by using Monte Carlo simulation for paddy (rice) agriculture, the public direct payment system was analyzed as an advantageous system in terms of farm household income when the market price was maintained at 176,515 won/80kg or more. In addition, it was analyzed that both expected income and income stability decreased compared to the existing direct payment for rice farms in all area sections of the public interest direct payment system. In the case of upland field, it was analyzed that the public interest direct payment system was superior in terms of farm household income due to the increased fixed direct payment compared to the existing direct payment for upland crops.
Fifth, the analyses on the income distribution effect for paddy and upland fields under different scenarios were conducted by calculating the Gini coefficients. In the case of paddy fields, the income distribution effect of the existing direct payment scheme was proven to be higher than that of the newly promoted public interest direct payment system. On the other hand, in the case of upland fields, the public interest direct payment system had a higher income distribution effect than the existing direct payment.
Lastly, the direct payment scheme for smallholder farms was proven to have a positive effect on alleviating income inequality among farm households. In addition, it was analyzed that the income distribution effect would be greater if the two major policy parameters of the smallholder direct payment, namely, farm size limits and the unit price, are adjusted upwards.
The purpose of this dissertation is to analyze the adequacy and policy effects of the public interest direct payment system. The major findings are as follows. First, a cluster analysis on the adequacy of the direct payment scheme for small scale farms reveals that the current standard which is set as 0.5 ha or less fails to match the actual characteristics of small scale farms. The result suggests that there is a high likelihood that a sizable number of small scale farms can be excluded if the direct payments are made based on the current policy standard.
Second, the hedonic price model and the present value theory were employed to analyze the validity and appropriateness of applying different payment unit between the agriculture promotion areas and non-promotion areas. The analysis was conducted by setting different direct payment unit prices according to whether the farmland is part of the agriculture promotion area or not. The findings from the analysis show that the land price of farmlands in the agriculture promotion area are relatively lower than those in the non-promotion areas.
The difference in farmland prices between the two regions can be interpreted as the effect of lowering the average asset value caused by the designation of the agriculture promotion area. Therefore, the current direct payment system that sets a higher unit price for farmlands within the agriculture promotion areas as a financial support measure to lessen the gap due to regulation can be seen as resonable in terms of equity. Nonetheless, the result of the analysis on the adequacy of the unit price of the direct payment between the agriculture promotion areas and non-promotion areas based on the present value theory suggests that the unit price for the former is still comparatively low.
Third, the values of public goods provided by paddy and upland fields are evaluated using the contingent valuation method and the replacement cost method. The results reveal a substantial gap between public values created by paddy fields and those by upland fields. In terms of specific functions such as environmental preservation, amenity provision, and food security, paddy fields produced greater public values than upland fields. The finding suggests that policy parameters such as the payment unit price need to be determined with a deliberate consideration of the public values created by multi-functionality of agriculture.
Forth, As a result of analyzing the income effect under price uncertainty by using Monte Carlo simulation for paddy (rice) agriculture, the public direct payment system was analyzed as an advantageous system in terms of farm household income when the market price was maintained at 176,515 won/80kg or more. In addition, it was analyzed that both expected income and income stability decreased compared to the existing direct payment for rice farms in all area sections of the public interest direct payment system. In the case of upland field, it was analyzed that the public interest direct payment system was superior in terms of farm household income due to the increased fixed direct payment compared to the existing direct payment for upland crops.
Fifth, the analyses on the income distribution effect for paddy and upland fields under different scenarios were conducted by calculating the Gini coefficients. In the case of paddy fields, the income distribution effect of the existing direct payment scheme was proven to be higher than that of the newly promoted public interest direct payment system. On the other hand, in the case of upland fields, the public interest direct payment system had a higher income distribution effect than the existing direct payment.
Lastly, the direct payment scheme for smallholder farms was proven to have a positive effect on alleviating income inequality among farm households. In addition, it was analyzed that the income distribution effect would be greater if the two major policy parameters of the smallholder direct payment, namely, farm size limits and the unit price, are adjusted upwards.
주제어
#Direct Payment Reform of Direct Payments Schemes Income Effects Income Redistribution Effects Public-interest Direct Payment System
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