| Summary: | The aim of this paper is to develop a theoretical framework to analyseregional welfare effects of EU’s Common Agricultural Policy. Given the mix ofagricultural policy measures on the one hand and the differences in the agriculturalproduction structure on the other hand the question how regions are affected iscrucial for analysing the overall welfare effects arising from the CAP. For thisreason the composition of transfers, the program design and the financing of themeasures are on the focus of this paper for regions in the federal state of Hesse,Germany. The analysis wants to contribute to the relevant literature in a twofoldway. Firstly, the federal structure of Germany is taken into account explicitly. Thishas important aspects in regard to the different co-financing rules as well as to thefinancing of the measures or funds. Secondly, much smaller regions – the Hessiancommunities – are considered in this study to obtain exact welfare effects at theregional level. The theoretical framework of this study shows that for rural regionsthe overall CAP generates positive welfare effects while it generates negativeeffects for urban regions.
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