Edoardo Baldoni (Joint Research Centre, Spain): “Estimating the impact of policies under spatial interference. The case of EU support to organic farming.”

Abstract:
This paper deals with the identification and estimation of a policy impact accounting for spatial interference. Most literature on treatment-effect excludes spatial interference by assumption, but in several policies, it is likely to occur as economic forces make contiguity affect agents’ behaviour. Focusing on agro-environmental policies, the paper proposes a theoretical foundation of farmers’ choices including spatial contiguity as a determinant. Alternative estimation approaches to deal with these issues are adopted. These are applied to organic farming support within the EU Common Agricultural Policy using the Italian 2008-2020 Farm Accountancy Data Network (FADN). Results suggest that spatial interference occurs and it may be relevant in both treatment assignment and impact. Spatially explicit Propensity Score Matching (PSM) methods seem more suitable to capture this complex interference.