Economic and environmental impacts of milk quota reform in Europe

Within the Health Check of the Common Agricultural Policy (CAP) the European Commission endorsed the proposal of a milk quota expiry. This paper presents simulation results on reform policies using the CAPRI model which has been updated with econometric estimates of milk quota rents at the level of ca. 230 European regions. The spatial resolution used allows identifying regions where economic or environmental changes are larger in absolute terms than visible at Member State level. Nitrate leaching problems could be exacerbated through the abolition of the milk quotas. But there is only weak evidence of an increased risk of land abandonment.