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GTAP Resource #1714

by van Meijl, Hans, Teunis van Rheenen, Andrzej Tabeau and Bas Eickhout

Goal of the paper:
The focus of this paper is on the development of a methodology to analyse future land use. For this purpose the modelling framework consisting of the macro-economic model (GTAP) and a more ecological-environmental based (IMAGE) was constructed. We employ this framework to quantify the economic impact of trade and domestic policy liberalization on land-use for the EU and other key players in the Doha round.

Method and data:
Four global scenarios along the IPCC storylines are constructed, using GTAP-IMAGE iterative modelling framework. The modified version of GTAP allowing better land use modelling is constructed and used. The linkage of the adapted GTAP model with the IMAGE framework is developed in order to model yields and feed efficiency changes.
Version 6.2 of the GTAP data for simulation experiments is used. The social accounting data are aggregated to 13 sectors and 37 regions. IMAGE data for the period 1765-1995 are used to initialize the carbon cycle and climate system in IMAGE. Crop yields and land-cover data for the period 1970-1995 from FAO are used for IMAGE calibration.

Background and approach:
In November 2001, Trade Ministers in Doha agreed on the mandate for a new World Trade Organization (WTO) Round on trade liberalization serving both development and environment. Recent research suggests that trade liberalization in agriculture can contribute to trade and growth and reduce poverty and hence, deliver at least partly on the Doha Development Agenda. However, a question to what extent these beneficiary effects can be used by the different developing countries is heavily debated. Moreover, most studies do not dwell on the environmental impact of trade liberalization. Consequently, the implications of agricultural reform on the environment remain largely uncertain, especially for the outcome for global and, more specific, the European land use.
This paper deals with the complex interaction between agricultural trade regimes, production and land-use given two key uncertainties. Firstly, a world where Doha succeeds and globalization proceeds versus a world that moves to regionalism with a stronger orientation towards bilateral and regional trade agreements. Secondly, a world that focuses on economic incentives and economic growth and a limited role for the government versus a world where public and private institutions value also the environment. These uncertainties are an elaboration of the four long-term greenhouse gas emission scenarios published by the Intergovernmental Panel on Climate Change (IPCC) in 2000. Our analyses quantify the economic impact of trade liberalization on agricultural development for the EU and other key players in the Doha round. In contrast to existing studies of trade liberalization we specifically focus on land-use implications.
To perform the analysis a consistent modelling framework was constructed, consisting of an modified version of the macro-economic model GTAP and a more ecological-environmental based model (IMAGE). In this modelling framework the long-term economic and environmental consequences of different scenarios are quantified and analysed in time steps of 10 years, starting from 2001 up to 2030. GTAP is the main model for economic analyses used for Doha issues. We used information from the OECDs Policy Evaluation Model (PEM) to improve the GTAP production structure and a new land allocation method that takes into account the variation of substitutability between different types of land. Also a new land supply curve was introduced that allows for the conversion of idle land to productive land as well as abandonment of agricultural land, taking the level of intensification of land use into consideration. The link with IMAGE (Integrated Model to Assess the Global Environment) was through yields and feed efficiency rates changes. In the approach used, the exogenous land efficiency parameters in GTAP are updated in an iterative process with the IMAGE model using yields calculated by IMAGE. The output of GTAP used as input for the IMAGE-iteration is sectoral production growth rates and a management factor describing the degree of land intensification. The IMAGE model then calculates yields, the demand for land and the environmental consequences on crop growth productivity. This procedure gave new yield levels, which are again used as input in the GTAP model. The iteration process stopped when land use was the same in both models.

Main findings:
Developing regions such as Africa, Asia and South and Central America obtain the highest growth in total agricultural land use. The position of a region on the land supply curve, yield developments, and developments in food demand are important determinants. In these regions agricultural land can still be expanded between 33% and 75% without leading to a high increase in the rental rate of land. The conversion of idle land to land use for agricultural production is mainly driven by macroeconomic factors such as GDP and population growth.
Our study shows that the agricultural land use changes in EU 15 are relatively small in all scenarios compared with other countries and ranges between 2 and 15 percent. The negative impact of policy on the agricultural land use is mitigated by the macro-economic factors such as GDP and population growth that have an impact on the demand for agricultural products and hence production.
The liberalization and agricultural policies play important role in the agricultural land use in EU15, especially in the globalization scenarios and causes a decrease of the total area of agricultural land use in the production process. The macroeconomic factors are less important than for developing regions.
For the EU15, the high GDP and population growth in the profit driven scenarios compensate the negative impact of reduction of domestic and border support for agriculture, and small changes in the agricultural land use are observed for these scenarios in EU15.
The relatively low GDP and population changes in the scenarios assuming strong government regulation accelerate the negative impact of the domestic and border support on the agricultural land changes and causes a significant but not massive reduction in the total agricultural land use in the production process.

Resource Details (Export Citation) GTAP Keywords
Category: GTAP Application
2005 Conference Paper
Status: Published
By/In: Presented at the 8th Annual Conference on Global Economic Analysis, Lübeck, Germany
Date: 2005
Created: Tabeau, A. (4/29/2005)
Updated: Batta, G. (6/21/2005)
Visits: 1,829
No keywords have been specified.

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