A sustainable regional policy

The regional policy goals of preserving the scattered population pattern and sustaining the amenity value of the landscape, have strong support in the Norwegian general public. Nevertheless, traditional agricultural support has neither been able to revers e the tendency of centralisation nor the deterioration of grazing land. In order to foster rural development in an economic environment of decreasing trade costs and rising international pressure on sector subsidies, traditional policy instruments should be revised. This project confronts a common challenge for most Western countries; to reorientate the regional policy from traditional sector support and towards public goods and more general policy instruments like programs for tax relief and infrastructu re investments. The workhorse of the project will be a multi-sector model of the Norwegian economy, with special focus on area and nature-based industries. The model allows us to analyze and compare (quantitatively) how different regional policy instrume nts will affect use of area and locations, and production and employment in typically rural industries. Since all major area and nature-based industries are included in the model, it is possible to highlight the relative importance of each industry in a regional policy setting, and to explore interconnections between industries through factor and product markets. A general equilibrium setting allows us to calculate economic costs of different regional policy schemes, when taking into consideration repe rcussions on the rest of the economy and allocative losses. As part of the project, the model will be further developed and adapted in order to study regional policy in general and agricultural public goods in particular. Of innovative and original chara cter, supply and demand for cultural landscape will be implemented in the model, and green technologies for environmental services and public goods will be included.