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Liu, X., Lehtonen, H., Purola, T., Pavlova, Y., Rötter, R., & Palosuo, T. (2016). Dynamic economic modelling of crop rotations with farm management practices under future pest pressure. Agricultural Systems, 144, 65–76.
Abstract: Agricultural practice is facing multiple challenges under volatile commodity markets, inevitable climate change, mounting pest pressure and various other environment-related constraints. The objective of this research is to present a dynamic optimization model of crop rotations and farm management and show its suitability for economic analysis over a 30 year time period. In this model, we include management practices such as fertilization, fungicide treatment and liming, and apply it in a region in Southwestern Finland. Results show that (i) growing pest pressure favours the cultivation of wheat-oats and wheat-oilseeds combinations, while (ii) market prices largely determine the crops in the rotation plan and the specific management practices adopted. The flexibility of our model can also be utilized in evaluating the value of other management options such as new cultivars under different projections of future climate and market conditions.
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Lehtonen, H. (2015). Evaluating adaptation and the production development of Finnish agriculture in climate and global change. Agricultural and Food Science, 24(3), 219–234.
Abstract: Agricultural product prices and policies influence the development of crop yields under climate change through farm level management decisions. On this basis, five main scenarios were specified for agricultural commodity prices and crop yields. An economic agricultural sector model was used in order to assess the impacts of the scenarios on production, land use and farm income in Finland. The results suggest that falling crop yields, if realized due to low prices and restrictive policies, will result in decreasing crop and livestock production and increasing nutrient surplus. Slowly increasing crop yields could stabilise production and increase farm income. Significantly higher crop prices and yields are required, however, for any marked increase in production in Finland. Cereals production would increase relatively more than livestock production, if there were high prices for agricultural products. This is explained by abundant land resources, a high opportunity cost of labour and policies maintaining current dairy and beef production.
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Nelson, G. C., Valin, H., Sands, R. D., Havlík, P., Ahammad, H., Deryng, D., et al. (2014). Climate change effects on agriculture: economic responses to biophysical shocks. Proc. Natl. Acad. Sci. U. S. A., 111(9), 3274–3279.
Abstract: Agricultural production is sensitive to weather and thus directly affected by climate change. Plausible estimates of these climate change impacts require combined use of climate, crop, and economic models. Results from previous studies vary substantially due to differences in models, scenarios, and data. This paper is part of a collective effort to systematically integrate these three types of models. We focus on the economic component of the assessment, investigating how nine global economic models of agriculture represent endogenous responses to seven standardized climate change scenarios produced by two climate and five crop models. These responses include adjustments in yields, area, consumption, and international trade. We apply biophysical shocks derived from the Intergovernmental Panel on Climate Change’s representative concentration pathway with end-of-century radiative forcing of 8.5 W/m(2). The mean biophysical yield effect with no incremental CO2 fertilization is a 17% reduction globally by 2050 relative to a scenario with unchanging climate. Endogenous economic responses reduce yield loss to 11%, increase area of major crops by 11%, and reduce consumption by 3%. Agricultural production, cropland area, trade, and prices show the greatest degree of variability in response to climate change, and consumption the lowest. The sources of these differences include model structure and specification; in particular, model assumptions about ease of land use conversion, intensification, and trade. This study identifies where models disagree on the relative responses to climate shocks and highlights research activities needed to improve the representation of agricultural adaptation responses to climate change.
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Mitter, H., Heumesser, C., & Schmid, E. (2015). Spatial modeling of robust crop production portfolios to assess agricultural vulnerability and adaptation to climate change. Land Use Policy, 46, 75–90.
Abstract: Agricultural vulnerability to climate change is likely to vary considerably between agro-environmental regions. Exemplified on Austrian cropland, we aim at (i) quantifying climate change impacts on agricultural vulnerability which is approximated by the indicators crop yields and gross margins, (ii) developing robust crop production portfolios for adaptation, and (iii) analyzing the effect of agricultural policies and risk aversion on the choice of crop production portfolios. We have employed a spatially explicit, integrated framework to assess agricultural vulnerability and adaptation. It combines a statistical climate change model for Austria and the period 2010-2040, a crop rotation model, the bio-physical process model EPIC (Environmental Policy Integrated Climate), and a portfolio optimization model. We find that under climate change, crop production portfolios include higher shares of intensive crop management practices, increasing average crop yields by 2-15% and expected gross margins by 3-18%, respectively. The results depend on the choice of adaptation measures and on the level of risk aversion and vary by region. In the semi-arid eastern parts of Austria, average dry matter crop yields are lower but gross margins are higher than in western Austria due to bio-physical and agronomic heterogeneities. An abolishment of decoupled farm payments and a threefold increase in agri-environmental premiums would reduce nitrogen inputs by 23-33%, but also crop yields and gross margins by 18-37%, on average. From a policy perspective, a twofold increase in agri-environmental premiums could effectively reduce the trade-offs between crop production and environmental impacts. (C) 2015 Elsevier Ltd. All rights reserved.
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Nelson, G. C., van der Mensbrugghe, D., Ahammad, H., Blanc, E., Calvin, K., Hasegawa, T., et al. (2014). Agriculture and climate change in global scenarios: why don’t the models agree. Agric. Econ., 45(1), 85.
Abstract: Agriculture is unique among economic sectors in the nature of impacts from climate change. The production activity that transforms inputs into agricultural outputs involves direct use of weather inputs (temperature, solar radiation available to the plant, and precipitation). Previous studies of the impacts of climate change on agriculture have reported substantial differences in outcomes such as prices, production, and trade arising from differences in model inputs and model specification. This article presents climate change results and underlying determinants from a model comparison exercise with 10 of the leading global economic models that include significant representation of agriculture. By harmonizing key drivers that include climate change effects, differences in model outcomes were reduced. The particular choice of climate change drivers for this comparison activity results in large and negative productivity effects. All models respond with higher prices. Producer behavior differs by model with some emphasizing area response and others yield response. Demand response is least important. The differences reflect both differences in model specification and perspectives on the future. The results from this study highlight the need to more fully compare the deep model parameters, to generate a call for a combination of econometric and validation studies to narrow the degree of uncertainty and variability in these parameters and to move to Monte Carlo type simulations to better map the contours of economic uncertainty.
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