Page 105 - Climate Change and Food Systems

lead consumers to reallocate their demand for commodities. The model solves for a new set
of equilibrium prices and quantities, and reports results for macro variables including welfare,
GDP, trade balances and exchange rates; and microeconomic variables including industry output, employment and trade.
CGE models can be either single-country, providing detailed accounts of several economic sectors, or multi-country models, where countries (or economic units) are interlinked through international trade and investments. The number of sectors can vary from as little as two (i.e. agriculture and non-agriculture) to a high number of sectors (industries or activities). CGE models can also be static (describe only the change from the initial equilibrium to the post-shock equilibrium, without describing the adjustment path) or recursive dynamic, which can solve sequentially for year- to-year equilibria over a time path, incorporating exogenous, projected changes in population, labour force and productivity. An advantage of recursive dynamic models in climate change analysis is their ability to describe and differentiate the effects of long-run trends in population and productivity growth from climate change shocks on the supply and prices of food in the future.
■ Climate and agriculture
One of the earliest CGE models to analyse climate change impact is the Future Agricultural Resources Model (FARM) developed by the Economic Research Service at the United States Department of Agriculture (USDA) (Darwin and Kennedy, 2000; Darwin, 2004). FARM was based on a geographic information system and divided land endowments into six land classes, characterized by soil temperature and length of growing season. Under this model, climate change induces a redistribution of land across the different land classes, and
the model captures the climate effects on crop yields, on pasture and forest productivity. FARM was later linked with the World Trade Model
with Climate-Sensitive Land (WTMCL) (Juliá and Duchin, 2007), which accounted for changes in runoff and the resulting changes in water supply for
irrigation. However, FARM was highly aggregated, representing the world in eight regional aggregates, while agriculture included only two sectors: crops and livestock.
Since then, there have been many advances in CGE modelling of climate change and adaptation, and many CGE models (both single- and multi- country) have been integrated into IAMs and have incorporated multiple pathways through which climate change affects an economy. Arndt et al. (2010) reported a single-country, integrated CGE framework to study the effects of climate change
in Mozambique through four pathways: agricultural crop productivity, irrigation water supply, infrastructure, and loss of land due to sea level rise. In a set of six linked models, the authors analyse four climate scenarios from CMIP3 projections. They address uncertainty about future climate
by selecting the highest and lowest projected precipitation effects in 2050 for the globe and for Mozambique.
GCM outputs for precipitation are used as inputs into a river basin model to determine
stream flows. These results are used as inputs
into water resource models, which estimate water availability inputs to a hydropower model that determines hydroelectric power generation and
the supply of water for irrigation. Flood data from the river basin model also inform an infrastructure model, estimated for each of three sub-regions in Mozambique. The infrastructure model provides estimated damage and maintenance costs resulting from the floods, which are determinants of transport productivity and costs. GCM projections for temperature and rainfall also are used in
generic crop simulation models that describe
the productivity and irrigation requirements for
14 major crops in each of the three sub-national regions of Mozambique. Finally, output from the DIVA model is used to estimate crop land loss
due to inundation resulting from sea level rise. All
of these data on crop yields, supply of irrigation water, transport costs and loss of land are then passed to a recursive dynamic, single-country CGE model, which is used to estimate the economy- wide impacts of climate change.
chapter 3: economic modelling of climate impacts and adaptation in agriculture: a survey of methods, results and gaps
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