This study aims at predicting the effects of planting rights liberalization on the wine industry of south-western region of Germany. Introduced by the CAP reform of 2008, abolishment of planting rights shall go into effect from 2018 the latest and is expected to cause changes in production volumes and market prices for wine throughout the EU. Rheinland-Pfalz is the most important wine producing region in Germany and thus investigated as a relevant case study here.
In order to assess the effects of planting rights liberalization a long run static partial equilibrium model is developed. The model projects equilibrium supply, demand and wholesale market price for two types of wine: barrel quality wine and wine for further processing. Since the modelling is conducted for the long term perspective, climate change effects on the land suitability for wine grapes growing are taken into consideration. With abolishment of planting rights, the model projects an increase of production of quality wine and wine for further processing and the fall of their domestic market prices.