At the core of the concept stands a quantitative tool based mainly on economic models allowing policy impact assessment of the different pillars and instruments of the Common Agricultural Policy.

The project mainly targets stakeholders at the European and national/regional level who design and evaluate the CAP according to the Pan-European character of the tool and the specifics of the call text. The tool will allow stakeholders to access indicators and scenario results via a Graphical User Interface (GUI) which will be an improved version of the existing CAPRI GUI. The exploitation possibilities of the GUI (tables, graphs, maps) can be used directly by stakeholders such as DG-AGRI, DG-ENV, DG-REGIO, the European Environmental Agency, and industrial or farming groups. Alternatively, analysts e.g. at the EU's Joint Research Centre or at other research institutions, may apply the tool for policy impact analysis, retrieve key results via the GUI and prepare stakeholder reports based on those results.

The main topics at the Pan-European level (for the moment EU 27) for policy impact analysis could be the ex-ante evaluation of Rural Development policy (RD) 2007-2013 at the level of the key RD indicators and different policy relevant scenarios regarding of the use of different type of RD measures and different funds level regarding the future (post 2013) design of RD policy and the budgetary reform of the EU.

With the second user group at the regional level the tool will be tested also for different policy relevant questions as mid-term and ex-post rural development programmes evaluation. Special attention will be given for the testing of the model for pre-accession policy relevant for IPA RD instruments as well as for the accession impact analysis regarding I. and II CAP Pillars for selected candidate and potential candidate countries. Two stakeholder groups (at Pan-European and at national/regional level) will be incorporated into the project to ensure that all relevant policy instruments are covered by the tool and that indicator calculators match stakeholder expectations. The users of the tools are identified as research teams that possess a strong background in quantitative modelling the agricultural sector, as well as lengthy experience in Pan-European and global policy impact assessment. These teams will map scenarios defined by stakeholders into the language of the economic models, and then run the models in a consistent manner to generate the indicators used for policy impact assessment.

Dissemination activities will target both established and potential clients and users of such a Pan-European tool. The current users are partners in the CAPRI-network and include JRC/IES, JRC/IPTS DG-AGRI and selected national/regional ministries responsible for RD measures. Yearly training sessions, which will also be open for researchers and/or institutions not yet working with CAPRI, will present changes in the system and provide hands-on training of the CAPRI-RD modelling system. As in the past for CAPRI, the training sessions will also place researchers from JRCs and desk officers from political DGs in a position to exploit the results from the database and scenario analysis.

The CAPRI-RD project will test and validate the proposed tool on a regular basis during its lifetime. This procedure has been applied successfully since 1999 for various research projects centred on CAPRI and has proven useful. The proposal therefore includes annual updates of database time series, annual development of a baseline and annual applications of the enlarged CAPRI(-RD) modelling system. The aim of this is threefold:

• Firstly, the procedure ensures that for the duration of the project, an operational and validated CAPRI(-RD) modelling system is always available for the CAPRI(-RD) network, including the EU Commission.

• Secondly, new or improved portions of CAPRI-RD that become operational during the project's lifetime will be integrated into the system and made available to the network of CAPRI(-RD) users. Thus, the results can already be exploited during the project's lifetime.

• And thirdly, the procedures involved in the application process, from database updates over projection to scenario definition and model application (including their IT implementation and documentation) will be tested in real-world applications, and can then be refined in further stages of the project. This is especially important for the indicator calculators: the clients, e.g. DG-AGRI in the context of the Rural Development Outlook Report, are able to review, validate and, when appropriate, use the new indicators once they become operational.

The project emphasises the integration of databases, models, indicators and IT.The project aims to develop a system which can be updated and kept operational beyond the lifetime of the project; also, the project's components are designed for transparent integration. The economic models will thus be structured so that they are sourced by harmonised databases of a Pan-European scale, wherever possible available at EUROSTAT. The indicators will be linked to the result sets generated by the models. The existing CAPRI IT infrastructure will be improved and expanded to host the various CAPRI-RD components.

As specified in the call text, the project builds upon CAPRI as a regionalised EU agricultural economic model. As required, CAPRI covers the EU27 plus Western Balkan countries as at the NUTS 2 level, whereas expansion to Turkey as well as a systematic review of data for the Western Balkans is part of the project proposal, in order to cover all Candidate and Potential Candidate Countries. Adapting to the need of Rural Development policy modelling is proposed based on two complementary methodologies. The first builds on developing economic models at the regional scale following the concept of CGEs, which cover all economic activities, including primary factor markets. That expansion mirrors the fact that many RD measures under Pillar II target sectors of the rural economy other than agriculture, and that farming has strong backward and forward linkages in rural regions. Variations in agricultural activities driven by policy and market changes thus impact other sectors of the rural economy, and those impacts need to be taken into account when analysing regional policy effects. The second methodological advance consists of the integrated and interlinked development of a database for CAP Pillar II and its interfaces to the economic models, as well as appropriate indicator calculators based on the CMEF. Thirdly, simulations in CAPRI will be based on the CAPRI farm type layer, which breaks down each NUTS 2 region in up to 10 farm models which are currently based on a typology that takes farm specialisation and size into account. The typology will be reviewed in the context of the project according to its suitability for RD impact assessment, and economic interaction between the farm types in NUTS II regions integrated in the modelling framework.

As required in the call text, instruments from Pillar I, including Cross-Compliance and GAEC, and measures from Pillar II impacting farm management decisions will, as far as possible, be implemented in CAPRI where missing. Given the project's Pan-European perspective, it is clear that its implementation must be based on a classification of the various measures based on attributes stored in Pan-European databases. In order to highlight the respective pros and cons of case-specific evaluations based on detailed knowledge of the measures and regional or national databases (which, however, often lack stringent quantitative analysis), for selected regions the project will compare the results simulated with CAPRI-RD for selected measures with their evaluation by regional teams.

Since 2001, the EU directive 2001/42/EC on Strategic Environmental Impact Assessment and the subsequent communication COM(2002)/276, as well as the impact assessment guidelines (SEC(2005) 791) have ensured that the economic, social and environmental consequences of certain plans and programmes are identified and assessed during their preparation and before their adoption. Compared to the ex ante evaluation of policy alternatives regarding their economic and budgetary effects only, as was often done in the past, assessing the likely environmental and social effects of a policy option or policy programme requires analysing results in their spatial context and in appropriate, often physical units. This is especially true for the reshaped CAP, which is focused along the three pillars of sustainability. Cross-compliance and GAEC as part of Pillar I, as well as Axis 2 of Pillar II, target the manifold interaction between agriculture, land use and the environment. At the same time, the reform of the Common Market Organisation fosters the integration of European farming into global markets.

RD measures under CAP Pillar II are integrated in the overall concept of RD and target not only agriculture, but also other sectors and impacts via forward and backward linkages with economic activities in other sectors. The feedback and indirect effects of a certain policy measure are usually as important as the direct effects. Especially in rural areas, the small sector assumption applied in Partial Equilibrium Models cannot be maintained. In CAPRI-RD, the development of a coherent and transparent link between a specialised sector model for agriculture and CGEs at the regional scale is therefore proposed. In addition to their ability to define appropriate environmental pressure indicators, the specialised model for agriculture describes CAP policies in sufficient detail so as to allow the evaluation of sectoral policies such as the Nitrate Directive or Cross Compliance under the CAP; this is difficult to achieve with other approaches, such as CGEs. On the other hand, the multi-sectoral character of the CGEs is needed to represent all economic activities relevant to regional and rural development which are targeted e.g. by Axis 3. It is thus the most promising way to adapt the model to the needs of Rural Development policy modelling.

Building a coherent link between these different economic models is therefore an important objective of CAPRI-RD. This implies the necessary structural development of the models to allow for interfacing, their consistent integration into a common software platform, their implementation for all EU Member Countries, plus all Candidate and Potential Candidate countries at the regional scale, and the development of methodologies for iterative linkage. The NUTS 2 breakdown of the economic models will allow major economic impacts of CAP and rural development policies to be simulated at an appropriate regional resolution.

Evaluating Community policies, especially regarding their environmental impacts, requires an appropriate spatial context as they depend on local factors such as soil, climate and landscape characteristics or habitat boundaries. Accordingly,a second important step links the regional level of administrative NUTS 2 units as found in the agricultural sector model with a spatial data layer at a 1x1 km pixel resolution at the Pan-European scale, based on the application and combination of a simple land use change model with statistical downscaling.

An important general contribution of CAPRI-RD will be the development of a methodology for common baselines of all models in CAPRI-RD which will describe plausible, consistent developments in the various sectors and in land use cover up to a final simulation year, including the effects of policies already decided upon according to current law.

The CAPRI-RD tool will allow the definition of ex ante policy scenarios - changes relative to baselines - and thereby facilitate impact assessments based on the extended and improved CAPRI modelling system; it will also calculate indicators based on the CMEF using an appropriate spatial resolution, and thus will be partly based on a spatially dis-aggregated result layer at 1x1 km resolution. A GUI will allow the user to steer those working steps and exploit the results via interactive tables, graphs and maps. The tool will comprise the CAPRI-Data Centre (CAPRI-DC) which will combine the model input or reference data ex-post with the projection results and results of counterfactual scenarios.

A major part of the project deals with the classification of RD measurements in general, and the measure under Pillar II specifically regarding their economic impact and their impact assessment in economic models. This work is closely related to a systematic scan of available data on the implementation of Pillar II measures. The aim here is to develop a database where the different measures and programmes are stored inter alia according to their economic model interfaces. For example, a farm investment programme will be linked to the price of capital for agriculture in the CGE.

As mentioned above, the project deals with integrating CAPRI with a layer of regional CGEs based on RegFIN. The specific aim is to develop methodological solutions, clear interfaces and a technical infrastructure that will allow a link to be made between different existing components at the regional level. Hence, in future, the sustainable development, maintenance and application of those components, as well as that of the overall CAPRI-RD tool, will be possible. The use of specialised agricultural sector models is motivated by the annexes to the impact assessment guidelines on page 23: "The strength of sectoral models is that they focus only on one economic sector and thus enable a relatively high degree of dis-aggregation and a detailed representation of the specific economic and institutional factors." Their main disadvantage, the missing links with other sectors of the economy, will be addressed by developing a Computable General Equilibrium at NUTS 2 level for whole of Europe. This will greatly enhance the potential of quantitative impact assessment for policies targeting the non-agricultural part of the economy, and furthermore allow analysis of both backwards and forwards linkages between economic activities at the regional scale. Based on the consistent description of income generation and distribution, the CGEs will deliver important economic and social indicators at the regional level. As stated in the annexes to the impact assessment guidelines on page 23: "The strength of CGE models is their internal consistency; i.e. they allow for consistent comparative analysis of policy scenarios by ensuring that in all scenarios the economic system remains in general equilibrium (however, extensions to model market imperfections are possible). They integrate micro-economic mechanisms and institutional features into a consistent macro-economic framework and consider feedback mechanisms between all markets. All behavioural equations (demand and supply) are derived from microeconomic principles."

Methodologies will be developed that link, in a sound scientific manner, CAPRI and the newly-developed layer of CGE models. This part of the project builds upon experience gathered in SEAMLESS, SENSOR, and CAPRI-Dynaspat and focuses on consistent iterative calibration techniques of partial and multi-sectoral models (agriculture sector models, CGE). Further, it technically integrates the various existing components. This kind of linkage goes beyond the work in SEAMLESS and SENSOR - where only agricultural activities are modelled at the regional scale, and interaction with other economic sectors is restricted to higher regional scales. As far as structural changes to existing components are necessary, CAPRI-RD will develop solutions ensuring that those components can still be used independently from each other. The same holds for the regional layer of CGE models, which can also later be used independently from the other regional models.

Access to the CAPRI databases, GAMS code, the GUI and documentation, as well as publicly available model results are organised via an SVN server hosted by UBONN. SVN is a Software Versioning System allowing the development of the system and its database in a distributed network. Users can download a local copy to work with, and then make automatic incremental updates to keep their local copy up-to-date. During the project's lifetime, an on-line documentation system for the code base of CAPRI will be developed and linked to the methodological documentation, which will also be converted into a suitable online format.

The overall aim of the CAPRI-RD project is thus to provide an integrated Pan-European operational tool, based on sound scientific methodologies, tested and validated for ex ante scenario-driven policy impact analysis of CAP Pillars I and II regarding the different pillars of sustainability, from national to a 1x1 km grid level.