Angelova, D. (2014). The state-contingent approach to production and choice under uncertainty: usefulness as a basis for economic modeling. FACCE MACSUR Mid-term Scientific Conference, 3(S) Sassari, Italy.
Abstract: The state-contingent approach developed by Chambers and Quiggin (2000) constitutes an attractive blend of a theory of production analysis under uncertainty and a theory of decision-making under uncertainty. One of the goals of this contribution is to introduce the reader to the approach by outlining its contents while comparing and contrasting it to related theories. With respect to production analysis: an emphasis is made on the ability of the approach to deliver well defined cost functions corresponding to stochastic production technologies. With respect to decision-making under uncertainty: the comparison with other theories consistent with a rational agent emphasizes the production theoretical basis of the state-contingent approach. It is the author’s belief that appropriately categorizing the state-contingent approach serves the primary goal of this work: to explore its usefulness as a basis for economic modeling. Some challenges regarding an empirical implementation are discussed: challenges in estimating the parameters of a state-contingent technology representation in general, as well as challenges arising from the fact that the approach is constructed around the argument pioneered by Leonard J Savage: that probabilities underlying economic decision-making are inherently subjective.(The financial support of ScienceCampus Halle is gratefully acknowledged.)
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Barnes, A., Shrestha, S., Thomson, S., Toma, L., Mathews, K., & Sutherland, L. A. (2014). Comparing visions for CAP reforms post 2015: Farmer intentions and farm bio-economic modelling. FACCE MACSUR Mid-term Scientific Conference, 3(S) Sassari, Italy.
Abstract: This paper illustrates the impacts of two of the potential CAP reform post 2015 scenarios using an optimising farm level model and compares results with farmers’ perception about the policy changes, captured in a farmer intentions survey. The model results suggest that beef farms suffer a loss in farm net margins under fully decoupled (up to -21%) as well as under partially decoupled scenario (up to -19%) compared to current historical single farm payments. The model also shows that farm respond by reducing the number of beef animals on farm by up to 5%. However, under a partial decoupled scenario, beef farms increase calf numbers by 15% to benefit from coupled calf payment. A survey of 1,400 beef producers with respect to their intentions toward 2020 was conducted in the Summer of 2013. A set of hypothetical payment scenarios was used to test self-reported response to a number of scenarios related to expanding and extensifying. These were compared with the modelling results and found a range of responses which could, we argue, be used for future calibration and ‘sense-checking’ of results within future modelling strategies.
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Biewald, A. (2014). The development of cereals and oilseed production until 2050 under different socioeconomic conditions in Finland. FACCE MACSUR Mid-term Scientific Conference, 3(S) Sassari, Italy.
Abstract: We will use Finland as an example of a small, developed country with difficult climatic conditions to show how changes in global food consumption patterns and global population growth will influence local production. In order to do so we use two different models. First, an agricultural sector model for Finland, and second, a regionally adapted version of a global, spatially explicit agroeconomic land use model. We use both models to investigate how Finnish cereals and oilseed production develops under different socioeconomic conditions, as defined in the Socioeconomic Pathways (SSPs). We find that without a major improvement of oilseed yields, oilseed production will be disrupted by 2050 and even with a major increase in oilseeds yields only in the SSP2 scenario production of oilseeds can be sustained. Cereal production on the other hand does not change in the simulations with the global model, but does almost decrease by half in the simulations with the national model. This shows that even with an enormous global population growth and reduced international trade, Finland will not become a major agricultural producer.
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Bourne, M. G., & Philippidis, G. (2014). A computable general equilibrium assessment of Spain’s greenhouse gas emissions policies and abatement options. FACCE MACSUR Mid-term Scientific Conference, 3(S) Sassari, Italy.
Abstract: Employing a recursive dynamic computable general equilibrium (CGE) model of the Spanish economy, this study aims to characterise the potential impact of Kyoto and European Union environmental policy targets on the Spanish economy up to 2020, with a focus on the agricultural sector. The model code is modified to characterise the emissions trading scheme (ETS), emissions quotas and carbon taxes, whilst emissions reductions are applied to all six registered greenhouse gases (GHGs). As extensions to this work, the study attempts to integrate the use of ‘Marginal Abatement Cost’ (MAC) curves for emissions reductions within the agricultural sector, and econometric estimates of the effects of global warming on land productivity in Spain.
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Camacho, C., & Perez-Barahona, A. (2014). Land use dynamics and the environment. FACCE MACSUR Mid-term Scientific Conference, 3(S) Sassari, Italy.
Abstract: This paper builds a benchmark framework to study optimal land use, encompassing land use activities and environmental degradation. We focus on the spatial externalities of land use as drivers of spatial patterns: land is immobile by nature, but location’s actions affect the whole space since pollution flows across locations resulting in both local and global damages. We prove that the decision maker problem has a solution, and characterize the corresponding social optimum trajectories by means of the Pontryagin conditions. We also show that the existence and uniqueness of steady-state solutions are not straightforward. Finally, a global dynamic algorithm is proposed in order to illustrate the spatial-dynamic richness of the model. We find that our simple set-up already reproduces a great variety of spatial patterns related to the interaction between land use activities and the environment. In particular, abatement technology turns out to play a central role as pollution stabilizer, allowing the economy to achieve stable steady-states that are spatially heterogeneous.
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