Capitalization of the Single Payment Scheme into Land Value: Generalized Propensity Score Evidence from the European Union

Jerzy Michalek, Pavel Ciaian and d’Artis Kancs


This paper estimates the capitalization of the single payment scheme (SPS) into land values. The theory suggests a nonlinear and discontinuous relationship between the SPS and land rents. In empirical analysis we employ unique farm-level panel data and apply the generalized propensity score matching approach. Our estimates suggest a 6% to 10% SPS capitalization rate. On average in the European Union, the nonfarming landowners’ gains from the SPS are only 4%. However, there is a large variation in the capitalization rate for different SPS levels and between different member states (3% to 94%). (JEL H23, Q15)