Income Volatility Patterns in EU Wine-Producing Regions and the Feasibility of Income Stabilisation Tools

Income volatility represents a central challenge for the economic sustainability of the European Union wine sector, particularly in the context of increasing market and climate-related risks. This thesis examines whether regional income volatility patterns in EU wine-producing regions justify a greater reliance on income-based stabilization instruments compared to traditional yield-based schemes. Using Farm Accountancy Data Network (FADN) data, the analysis combines structural income indicators (Farm Net Value Added (FNVA) and income per hectare) with measures of income volatility and Income Stabilisation Tool (IST) frequency–severity profiles. The results reveal substantial structural heterogeneity across EU wine regions. Although projected IST risk values remain within a relatively narrow range for most regions, differences in economic capacity significantly shape the potential effectiveness of income-based stabilisation instruments. The findings indicate that stabilisation needs are not determined by volatility alone, but by the economic base around which income fluctuations occur. Regions characterised by economically viable production systems and episodic yet meaningful income losses appear most likely to benefit from income-based stabilisation tools. In contrast, structurally constrained regions with persistently low income levels may require complementary structural or investment-oriented measures beyond income smoothing mechanisms. Overall, the study suggests that a greater reliance on income-based stabilisation instruments is justified only where structural income conditions support their effectiveness. Effective policy design within the Common Agricultural Policy therefore requires integrating income volatility assessment with a careful evaluation of regional structural disparities.