Where have all the funds gone? Multiregional input-output analysis of the European Agricultural Fund for Rural Development

The new European Agricultural Fund for Rural Development (EAFRD) was purposely established to “contribute to the promotion of sustainable rural development throughout the EU community”. This paper addresses the sustainability of the EAFRD from a triple bottom line perspective in a multiregional input-output model. This framework allows us to study both the trade relations within the EU target regions and also the relations of the EU with some other regions in the world. Additionally, the model allows us to determine the losses (leakages) or gains (boosts and feedbacks) of a wide range of effects. On the other hand, this framework allows a simultaneous consideration of socioeconomic and environmental fund effects to identify their causes and flows and to clarify and reallocate benefits and responsibilities across levels and regions. The estimation of direct and indirect impact effects in an EU country clarifies the following: a) how the leakages to other regions generate a final economic impact that redistributes the prior fund distribution; b) how relevant the countries' participation in global production chains are; and c) how the potential existence of an ecological unequal exchange is assessed. The main data originate from the WIOD database and the European Network for Rural Development.