Tools
Tools
Nguyen, Manh-Hung
(2026)
The stranding cost of agricultural subsidies under climate-transition and biodiversity-regulation risks.
TSE Working Paper, n. 26-1746, Toulouse
Preview |
Text
Download (826kB) | Preview |
Abstract
Anticipated carbon pricing and biodiversity regulation turn agricultural subsidies into stranded assets. In a continuous-time model of partially irreversible capital under Poisson policy arrival, calibrated to Danish dairy, the stranding loss is strictly convex in the capital overhang. Under full pass-through of CAP support into livestock capital, Common Agricultural Policy payments amplify the loss by a factor of 13.2; at a 25% pass-through the multiplier is 1.7. A second biodiversity risk contracts the capital target by 60 percent; expected stranding losses are super-modular in the subsidy pair in the risk-neutral benchmark and satisfy the same ranking numer-ically in the calibrated HJB, so joint reform dominates staged reform. The welfare-maximising subsidy is zero once the social cost of methane exceeds € 19/tCO2e.
| Item Type: | Monograph (Working Paper) |
|---|---|
| Language: | English |
| Date: | 12 May 2026 |
| Place of Publication: | Toulouse |
| Uncontrolled Keywords: | irreversible investment, policy risk, stranded assets, carbon taxation, biodiversity regulation, subsidy design |
| JEL Classification: | E22 - Capital; Investment (including Inventories); Capacity H23 - Externalities; Redistributive Effects; Environmental Taxes and Subsidies Q18 - Agricultural Policy; Food Policy Q54 - Climate; Natural Disasters Q57 - Ecological Economics - Ecosystem Services; Biodiversity Conservation; Bioeconomics; Industrial Ecology |
| Subjects: | B- ECONOMIE ET FINANCE |
| Divisions: | TSE-R (Toulouse) |
| Institution: | Université Toulouse Capitole |
| Site: | UT1 |
| Date Deposited: | 13 May 2026 14:44 |
| Last Modified: | 20 May 2026 12:18 |
| OAI Identifier: | oai:tse-fr.eu:131713 |
| URI: | https://publications.ut-capitole.fr/id/eprint/53655 |
