Re-adjusting risk management within the CAP: evidences on the implementation of the Income Stabilisation Tool in Italy

n order to contribute to the literature on the Income Stabilisation Tool (IST), this study investigates which is the better geographical dimension of a sector- -specific instrument. In particular, the study focuses on Italian farms specialised in viticulture over the period of 2011-2014, estimating their income losses, the level of indemnification and the average fee due to farmers. We also compare the hypothesis of both a national IST and five different macro-regional funds, considering the threshold for indemnification at 30% and 20%. Results suggest a strategy to establish a double mechanism where macro-regional funds can guarantee more tailored fees for farmers (specific for different geographical are- as and level of riskiness), whereas a national IST, being able to reduce the sys- temic risk and the variability of income losses more than smaller funds, can pro- vide resources for the compensation of farm losses, in case of insolvency.