Agricultural economy/Description: Difference between revisions

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(Replaced content with "{{ComponentSubDescriptionTemplate |Status=On hold |Reference=van Meijl, 2006; Hertel, 1997; Britz, 2003; Armington, 1969;Huang, 2004;Hertel, 2003;Helming, 2010;Banse, 2008...")
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|Reference=van Meijl, 2006; Hertel, 1997; Britz, 2003; Armington, 1969;Huang, 2004;Hertel, 2003;Helming, 2010;Banse, 2008; Woltjer, 2011; Overmars et al. forthcoming
|Reference=van Meijl, 2006; Hertel, 1997; Britz, 2003; Armington, 1969;Huang, 2004;Hertel, 2003;Helming, 2010;Banse, 2008; Woltjer, 2011; Overmars et al. forthcoming
|Description=<h2>Model description Agricultural economy and forestry</h2>
|Description=<h2>Model description Agricultural economy and forestry</h2>
The MAGNET model ([[van Meijl, 2006]]) is based on the standard GTAP model ([[Hertel, 1997]]), which is a multi-regional, static, applied computable general equilibrium ([[hasAcronym::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. See [[Flowchart AEF]].


===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 [[hasAcronym::FAO]] estimates ([[Britz, 2003]]), and dynamically depend on purchasing power parity ([[hasAcronym::PPP]]) 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 [[IMAGE region (background category)]]. 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]]).
===Land use===
Additional to the standard GTAP model, MAGNET includes a dynamic land supply function ([[van Meijl, 2006]]) which accounts for the availability and suitability of land for agricultural use, based on information from IMAGE (see  [[Flowchart AEF]]) ). A nested land use structure accounts for the different degrees of substitutability between types of land use ([[Huang, 2004]];[[van Meijl, 2006]]), and includes an imperfect mobility of capital and labour between agricultural and non-agricultural sectors ([[Hertel, 2003]]). In addition, the MAGNET model includes international and EU agricultural policies, such as quota and import tariffs ([[Helming, 2010]]).
Biofuel crops: MAGNET includes first-generation biofuels ([[Banse, 2008]]), 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’ and is now represented explicitly ([[Woltjer, 2011]]). 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 ([[hasAcronym::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).
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