Climate change and agriculture in computable general equilibrium models: alternative modeling strategies and data needs

Abstract

Agricultural sectors play a key role in the economics of climate change. Land as an input to agricultural production is one of the most important links between economy and the biosphere, representing a direct projection of human action on the natural environment. Agricultural management practices and cropping patterns exert an enormous effect on biogeochemical cycles, freshwater availability and soil quality. Agriculture also plays an important role in emitting and storing greenhouse gases. To consistently investigate climate policy and future pathways for the economic and natural environment, a realistic representation of agricultural land use is essential. Top-down Computable General Equilibrium (CGE) models have increasingly been used for this purpose. CGE models simulate the simultaneous equilibrium in a set of interdependent markets, and are especially suited to analyze agricultural markets from a global perspective. However, modeling agricultural sectors in CGE models is not a trivial task, mainly because of differences in temporal and geographic aggregation scales. This study surveys some proposed modeling strategies and highlights different tradeoffs involved in the various approaches. Coupling of

Decreases in global beer supply due to extreme drought and heat

“…Third, the yield shocks for barley were incorporated into GTAP model via changes in land use efficiency for the land used by barley production in each region (parameter "afe" in Eq. 3), the conventional method for translating yield perturbations into economic models 28,29,70 . Land use efficiency affects both price and demand for land in the following two equations.…”

Policy measures to promote mid-summer drainage in paddy fields for a reduction in methane gas emissions: the application of a dynamic, spatial computable general equilibrium model

“…The CGE model depicts inter-market relations and trade flows in the economy as a whole and considers the circular flow of income and expenditures under limited resources. Therefore, CGE models are better suited for analyzing global effects on agricultural markets and policy issues, as is the case with climate change (Masui 2005;Palatnik and Roson 2012;Kunimitsu 2018). Further, Lee (2009) used a multisector CGE model to analyze the impact of climate change on global food prices and quantities; his analysis revealed that climate change benefited developed countries in their crop yields, but negatively influenced developing countries.…”

Do Farmers Adapt to Climate Change? A Macro Perspective

“…A growing body of economic literature has focused on the impacts of climate change on the agriculture sector at a macro level [3][4][5][6][7][8][9][10][11][12][13][14][15][16][17][18]. The common finding of these studies is that climatic changes adversely affect crop yields.…”