Agricultural economy
| Applications | |
| Population (region) | Demand for agricultural and all other commodities |
| Internal modules | |
| External modules | |
| References | |
| EFIGTM | |
| IMPACT | |
| MAGNET |
Introduction
Expansion of agriculture is one of the most important and visible alternations of the natural environment, leading to greenhouse gas emissions, loss of biodiversity and ecosystem services, and nutrient imbalances. It is driven by the production of food, feed for livestock, fibers and other products, bioenergy and timber, resulting from domestic demand and trade in these products. In IMAGE, demand and trade are based on external projections of demographic and economic development, technological change, policy scenarios, and resource availability. Changes in income and population lead to a changing demand for agricultural commodities. This induces a change in the supply, which also depends on the resource availability and the efficiency of natural resource use. This efficiency can change as a result of technological change and substitution between production factors.
Agricultural economy
Agricultural production is distributed across regions via trade, depending on their historic trade balances and their competitiveness. In IMAGE, two different agro-economic models, IMPACT and MAGNET (formerly LEITAP) can be applied via a soft model linkage linkage scheme {!Add thumbnail or picture of scheme ?} to model the future development of the agricultural economy. The model selection depends on the specific questions to be addressed. While IMPACT has been used for developing alternative baselines in international assessments like Millennium Ecosystem Assessment and UNEPs Global Environmental Outlooks , the MAGNET model has been applied more often to study specific policy options at the global and regional scale, and for European assessments such as Eururalis. The coupling between these two models and IMAGE is similar (see scheme above), and a detailed comparison between the two models is available elsewhere Reference Stehfest, 2013 #778. Here, the focus is on MAGNET Flow diagram magnet {!Add thumbnail or picture of diagram?} .
Agricultural forestry
The demand for forest products can be derived in IMAGE from several sources. In the most simple case via a simple relation with GDP, or, preferably, prescribed from specific forest demand models like EFIGTM (Ref.). In the future, full competition of forestry with other land uses can be accounted for by using the forestry module of MAGNET (not available yet). Other land use changes, like the expansion of infrastructure, which do not require inter-regional connections, are described in the land use allocation module {!Chapter/Module consistency}.
Development Notes Introduction
References to:
- External models (used but not developed within the IMAGE framework)
- Projects
- Internal modules
- References
Acronyms
- GDP,...
More about Agricultural economy
You can find more information on the following pages:
- Agricultural economy/Description for a detailed description of this module
- Agricultural economy/Input_output_assumptions for input-output relations and assumptions
- Agricultural economy/Policy Interventions for policy interventions and illustrated effects
- Agricultural economy/Data_uncertainties_limitatations for details about data, uncertainty and limitations
- Agricultural economy/References for key references and other references
Module Description of Agricultural economy
Intro
The MAGNET model van Meijl, 2006 #41 reference is based on the standard GTAP model Hertel, 1997 #39 reference, which is a multi-regional, static, applied computable general equilibrium (CGE) model based on neoclassical microeconomic theory. MAGNET is a further development of GTAP regarding land use, private consumption, livestock, food, feed and energy crop production, and emission reduction cost curves.
File:IMAGE-MAGNET coupling.png Coupling scheme here
Demand and supply
Household demand is calculated as a function of income, income elasticities, price elasticities, and cross-price elasticities. Income elasticities for agricultural commodities are consistent with FAO estimates Britz, 2003 #246 reference, and dynamically depend on purchasing power parity corrected real GDP per capita. The change in indirect demand for food (e.g. via the service sector) follows the change in direct household demand. The supply of all commodities is modelled by an input–output structure that explicitly links industries for goods and services for consumption via different stages of processing back to primary goods (crops and livestock products) and resources. In the model, a representative producer for each sector of a country or region makes production decisions to maximise profit by choosing inputs of labour, capital, and intermediates. Changes in relative prices for inputs lead to a substitution between inputs, following their elasticity of substitution.
Regional aggregation and trade
MAGNET distinguishes single European countries and, outside Europe, 22 large world regions, closely matching the IMAGE regions link to backgroud page IMAGE region (or MAGNET region. Similar to most other CGE models, MAGNET assumes that products traded internationally are differentiated according to country of origin, i.e. domestic and foreign products are not perfectly identical, but imperfect substitutes (the so-called Armington assumption [Armington, 1969 #40].
Land use
Additional to the standard GTAP model, MAGNET includes a dynamic land supply function [van Meijl, 2006 #41] which accounts for the availability and suitability of land for agricultural use, based on information from IMAGE (see below, and figure 4.2.1a). A nested land use structure accounts for the different degrees of substitutability between types of land use [Huang, 2004 #42;van Meijl, 2006 #41], and includes an imperfect mobility of capital and labour between agricultural and non-agricultural sectors [Hertel, 2003 #43]. In addition, the MAGNET model includes international and EU agricultural policies, such as quota and import tariffs [Helming, 2010 #448]. Biofuel crops: MAGNET includes first-generation biofuels [Banse, 2008 #44], and the use of by-products of biofuel production in the livestock sector.
Livestock
The modelling of the livestock sector has been updated to include co-products from biofuels, and the feed sector, which formerly was aggregated to ‘other feed and food’ is now represented explicitly [Woltjer, 2011 #45]. MAGNET distinguishes the livestock commodities beef and dairy cattle, both feeding on grass and crops, and a category ‘other animals’ that feed primarily on crops, such as chickens and pigs. Grassland and feed from crops can be substituted.
Reduced emissions from deforestation and forest degradation
Recently, the MAGNET model, together with information from IMAGE has been applied to derive cost curves for emission reduction from deforestation and forest degradation (REDD), by excluding, in a series of experiments, carbon rich areas from agricultural expansion, and using resulting changes in GDP to estimate cost of emission reduction per ton carbon (Overmars et al. forthcoming).
Links to other parts of the model and feedbacks
MAGNET is driven by scenarios for population, income, and technological change (chapter 3), and the land supply curve from IMAGE (see coupling scheme). Regional land supply curves are obtained from potential land productivity and availability of cropland on a 0.5 by 0.5 degree resolution from the IMAGE model; curves are obtained by ordering all grid cells in each of the 24 world regions from high to low crop productivity from the LPJ model link to chapter 6.1.2, and summing the total area; land productivity can be translated to a land supply curve assuming that the land price is a function of the inverse of the land productivity. In regions where most of the area suitable for agriculture is already in use, the price elasticity of land supply is low, with little expansion occurring at strong price changes, whereas in region with a large reserve of suitable agricultural land, such as Sub-Saharan Africa, the price elasticity of land supply is high, i.e. strong expansion of agricultural land occurs at small price changes.
Agricultural yields in MAGNET change as a result of four processes:
- technological change (external scenario assumption)
- intensification due to the substitution of production factors (endogeonus)
- climate change (from IMAGE)
- change in agricultural area affecting crop yields (for example decreasing average yields due to expansion into less suitable regions) (from IMAGE)
For the climate and area effects, yields are calculated by LPJ and the land use allocation model of IMAGE, and communicated to MAGNET. In return, results from MAGNET on regional production and technological change, per crop and livestock commodity, are used in IMAGE to allocate agricultural land use until the required production level is met [link to chapter 4.2.3 Land use allocation]]. As long term demand for bionergy, especially in climate policy scenarios, are calculated by IMAGE’s energy and industry model TIMER link to chapter 4.1, this demand needs to be combined with the more short-term biofuel demand from MAGNET link to chapter on biofuels.
Development notes
Flowchart moet nog ergens als lthumbnail en losse pagina ???
- references
- external models: GTAP,
Acronymes: CGE, FAO, REDD
- internal modules/pages
- Question: Is MAGNET an integral part of IMAGE or an external module, definitions!