Agricultural and Resource Economics Commons^™

The Buffer Value Of Trade: Quantifying How Global Integration Stabilizes Food Prices And Farm Incomes, Iman Haqiqi, Thomas Hertel

Department of Agricultural Economics Faculty Publications

International trade plays a critical but often underappreciated role in stabilizing global food systems. This study quantifies the buffer value of trade by comparing observed conditions of global integration with a counterfactual restricted-trade world (half trade volume). Using a global market equilibrium model of agriculture combined with a novel randomized yield-shock framework, we evaluate how production volatility translates into volatility in consumer food prices and farm incomes across global regions in 1991–2020. Results show that trade substantially dampens volatility transmission. In the United States, year-on-year volatility in farm income declines nearly threefold under open trade (from 12.1 to 3.9), while …

Climate Change Agricultural Comparative Advantage And The Us Trade Balance, Elizabeth A. Fraysse, Thomas Hertel, Roman M. Keeney

Department of Agricultural Economics Faculty Publications

Current science indicates that warming and elevated atmospheric CO₂ will have ambiguous results for crop productivity depending on crop type and geographic location, whereas increased heat stress makes livestock and human labor less productive. The differential impacts across regions will alter comparative advantage and shift the patterns of global trade. This paper employs an economywide trade model to assess all three types of productivity shocks under a 3°C global warming scenario. We find that the widening agricultural trade deficits persist, even as the overall US trade balance improves due to enhanced investment inflows.

Global Drivers And Local Management Of Groundwater Stress: A High-Resolution Economic Analysis Of Land, Water, And Food Systems, Iman Haqiqi, Thomas Hertel, Kavitha Srikanth

Department of Agricultural Economics Faculty Publications

Groundwater stress, a critical challenge for global water security and food production, has intensified due to the interaction of global change drivers and rapidly evolving local conditions. This paper investigates the individual and combined impacts of water availability, heat, population growth, income dynamics, and technological advancements on global groundwater stress over a historical period from 1997 to 2017. Utilizing the gridded Simplified International Model of agricultural Prices, Land use, and the Environment (SIMPLE-G), the study attributes local changes in water and land use patterns to these key global drivers. Furthermore, it evaluates an alternative, counterfactual scenario in which sustainable management …

Exposure To Compound Climate Hazards Transmitted Via Global Agricultural Trade Networks, Patrick W. Keys, Elizabeth A. Barnes, Noah S. Diffenbaugh, Thomas Hertel, Uris L C Baldos, Johanna Hedlund

Department of Agricultural Economics Faculty Publications

Compound climate hazards, such as co-occurring temperature and precipitation extremes, substantially impact people and ecosystems. Internal climate variability combines with the forced global warming response to determine both the magnitude and spatial distribution of these events, and their consequences can propagate from one country to another via many pathways. We examine how exposure to compound climate hazards in one country is transmitted internationally via agricultural trade networks by analyzing a large ensemble of climate model simulations and comprehensive trade data of four crops (i.e. wheat, maize, rice and soya). Combinations of variability-driven climate patterns and existing global agricultural trade give …

Economic Analysis Of Global And Local Policies For Respecting Planetary Boundaries, Thomas Hertel

Department of Agricultural Economics Faculty Publications

In a series of highly cited papers over the period of 2009–2023, earth system scientists have identified a set of nine planetary boundaries that must not be breached if we wish to avoid catastrophic consequences for nature and humanity. These range from well-mixed, global boundaries, such as climate-altering atmospheric greenhouse gas concentrations, to localized limits on freshwater availability and reactive nitrogen entering the environment. Recent estimates suggest that six of the nine planetary boundaries have already been breached. The food system is a key driver of these exceedances and, therefore, must play a key role in any solutions. However, the …

Effectiveness And Distributional Impacts Of Conservation Policies: The Role Of Labor Markets, Srabashi Ray, Thomas Hertel

Department of Agricultural Economics Faculty Publications

Conservation policies are critical for sustainable management of natural resources. Ray et al. (2023) argues that rigidities in labor markets dampens the impact of conservation policies, in terms of changes in employment and production while also ignoring endogenous change in wages. In this paper, we find that the interaction between conservation policies and labor markets are more complex. We develop a stylized two-input framework that identifies key parameters that determine the effectiveness (in terms of resources conserved) and distributional effects of a conservation policy (amongst consumers, resource owners and farmworkers) depending on the representation of labor markets. The empirical application …

Adoption Of Improved Crop Varieties Limited Biodiversity Losses, Terrestrial Carbon Emissions, And Cropland Expansion In The Tropics, Uris Baldos, Alfredo Cisneros-Pineda, Keith O. Fuglie, Thomas Hertel

Department of Agricultural Economics Faculty Publications

Research investments in crop improvements, including by national and international agricultural research centers, have made significant contributions to raising yields of staple food crops in developing countries. Although mostly intended to improve food security and rural incomes, innovations in crop production also have major implications for the environment. Building on the latest productivity estimates from historical crop improvements in developing countries and using a gridded (0.25 degrees) equilibrium model of global agriculture, we assess the impacts of improved crop varieties on cropland use, threatened biodiversity, and terrestrial carbon stocks over 1961–2015. We replicate a historical baseline and produce a counterfactual …

Current Food Trade Helps Mitigate Future Climate Change Impacts In Lower-Income Nations, Kushank Bajaj, Zia Mehrabi, Thomas O. Kastner, Jonas Jägermeyr, Christoph Müller, Florian , Schwarzmüller, Thomas Hertel, Navin Ramankutty

Department of Agricultural Economics Faculty Publications

The risk of national food supply disruptions is linked to both domestic production and food imports. But assessments of climate change risks for food systems typically focus on the impacts on domestic production, ignoring climate impacts in supplying regions. Here, we use global crop modeling data in combination with current trade flows to evaluate potential climate change impacts on national food supply, comparing impacts on domestic production alone (domestic production impacts) to impacts considering how climate change impacts production in all source regions (consumption impact). Under 2°C additional global mean warming over present day, our analysis highlights that climate impacts …

Agricultural Productivity And Climate Mitigation, Keith O. Fuglie, Thomas W. Hertel, David B. Lobell, Nelson B. Villoria

Department of Agricultural Economics Faculty Publications

Agriculture will play a central role in meeting greenhouse gas (GHG) emission targets, as the sector currently contributes ∼22% of global emissions. Because emissions are directly tied to resources employed in farm production, such as land, fertilizer, and ruminant animals, the productivity of input use tends to be inversely related to emissions intensity. We review evidence on how productivity gains in agriculture have contributed to historical changes in emissions, how they affect land use emissions both locally and globally, and how investments in research and development (R&D) affect productivity and therefore emissions. The world average agricultural emissions intensity fell by …

Integrated Modeling Of Nature’S Role In Human Well-Being: A Research Agenda, Rebecca Chaplin-Kramer, Stephen Polasky, Rob Alkemade, Neil D. Burgess, William W.L. Cheung, Ingo Fetzer, Mike Harfoot, Thomas W. Hertel, Samantha L.L. Hill, Justin Andrew Johnson, Jan H. Janse, Patrick José V. Jeetze, Hyejin Kim, Jan J. Kuiper, Eric Lonsdorf, David Leclère, Mark Mulligan, Garry D. Peterson, Alexander Popp, Stephanie Roe, Aafke M. Schipper, Tord Snäll, Arnout Van Soesbergen, Aline C. Soterroni, Elke Stehfest, Detlef P. Van Vuuren, Piero Visconti, Lan Wang-Erlandsson, Geoff Wells, Henrique M. Pereira

Department of Agricultural Economics Faculty Publications

Integrated assessment models that incorporate biodiversity and ecosystem services could be an important tool for improving our understanding of interconnected social-economic-ecological systems, and for analyzing how policy alternatives can shift future trajectories towards more sustainable development. Despite recent scientific and technological advances, key gaps remain in the scientific community’s ability to deliver information to decision-makers at the pace and scale needed to address sustainability challenges. We identify five research frontiers for integrated social-economic-ecological modeling (primarily focused on terrestrial systems) to

incorporate biodiversity and ecosystem services: 1) downscaling impacts of direct and indirect drivers on eco- systems; 2) incorporating feedbacks in …

Assessing Effects Of Climate And Technology Uncertainties In Large Natural Resource Allocation Problems, Jevgenijs Steinbuks, Yongyang Cai, Jonas Jaegermeyr, Thomas W. Hertel

Department of Agricultural Economics Faculty Publications

The productivity of the world's natural resources is critically dependent on a variety of highly uncertain factors, which obscure individual investors and governments that seek to make long-term, sometimes irreversible, investments in their exploration and utilization. These dynamic considerations are poorly represented in disaggregated resource models, as incorporating uncertainty into large-dimensional problems presents a challenging computational task. In this paper, we apply the SCEQ algorithm (Cai and Judd, 2023) to solve a large-scale dynamic stochastic global land resource use problem with stochastic crop yields due to adverse climate impacts and limits on further technological progress. For the same model parameters …

A Modelled Estimate Of Food Access Within Countries Shows That Inequality Within Countries Has Increased Despite Rising Equality Between Countries, Juan Diego Martinez, Navin Ramankutty, Zia Mehrabi, Tom W. Hertel

Department of Agricultural Economics Faculty Publications

Global food calorie supply per person is more than 2900 kcal per day on average, but we have failed to ensure equitable access to these calories. Yet how uneven food access is within countries has remained poorly understood, as has the progress made over the past five decades on closing the access gap. Using publicly available data, we developed a theoretically-grounded statistical model to estimate the cross-national relationship between average per capita expenditure and per capita food availability and used this to estimate within-country access to food for income deciles in 135 countries. We find that, from 1961 to 2013, …

Planned Expansion Of Transportation Infrastructure In Brazil Has Implications For The Pattern Of Agricultural Production And Carbon Emissions, Zhan Wang, Geraldo B. Martha Jr., Jing Liu, Cicero Z. Lima, Thomas W. Hertel

Department of Agricultural Economics Faculty Publications

High transportation costs have been a barrier to the expansion of agriculture in the interior of Brazil. To reduce transportation costs, Brazil launched the National Logistics Plan, aiming to expand its railway network by up to 91 % by 2035. Such a large-scale infrastructure investment raises concerns about its economic and environmental consequences. By combining geospatial estimation of transportation cost with a grid-resolving, multi-scale economic model that bridges fine-scale crop production with its trade and demand from national and global perspectives, we explore impacts of transportation infrastructure expansion on agricultural production, land use changes, and carbon emissions both locally and …

Focus On Global–Local–Global Analysis Of Sustainability, Thomas W. Hertel, Elena Irwin, Stephen Polasky, Navin Ramankutty

Department of Agricultural Economics Faculty Publications

This special issue is the outcome of a workshop held at Purdue University in April 2022. It comprises thematic syntheses of five overarching dimensions of the Global-to-Local-to-Global (GLG) challenge to ensuring the long-term sustainability of land and water resources. These thematic dimensions include: climate change, ecosystems and biodiversity, governance, water resources and cyberinfrastructure. In addition, there are eight applications of GLG analysis to specific land and water sustainability challenges, ranging from environmental stress in the Amazon River Basin to groundwater depletion in the United States. Based on these papers, we conclude that, without fine-scale, local analysis, interventions focusing on land …

Tackling Policy Leakage And Targeting Hotspots Could Be Key To Addressing The ‘Wicked’ Challenge Of Nutrient Pollution From Corn Production In The U.S., Jing Liu, Laura Bowling, Christopher Kucharik, Sadia Jame, Uris Baldos, Larissa Jarvis, Navin Ramankutty, Thomas Hertel

Department of Agricultural Economics Faculty Publications

Reducing nutrient loss from agriculture to improve water quality requires a combination of management practices. However, it has been unclear what pattern of mitigation is likely to emerge from different policies, individually and combined, and the consequences for local and national land use and farm returns. We address this research gap by constructing an integrated multi-scale framework for evaluating alternative nitrogen loss management policies for corn production in the US. This approach combines site- and practice-specific agro-ecosystem processes with a grid-resolving economic model to identify locations that can be prioritized to increase the economic efficiency of the policies. We find …

Investing In Nature Can Improve Equity And Economic Returns, Justin Andrew Johnson, Uris Baldos, Erwin Corong, Thomas Hertel, Stephen Polasky, Raffaello Cervigni, Toby Roxburgh, Giovanni Ruta, Colette Salemi, Sumil Thakrar

Department of Agricultural Economics Faculty Publications

Sustainable development requires jointly achieving economic development to raise standards of living and environmental sustainability to secure these gains for the long run. Here, we develop a local-to-global, and global-to-local, earth-economy model that integrates the Global Trade Analysis Project (GTAP)-computable general equilibrium model of the economy with the Integrated Valuation of Ecosystem Services and Tradeoffs (InVEST) model of fine-scale, spatially explicit ecosystem services. The integrated model, GTAP–InVEST, jointly determines land use, environmental conditions, ecosystem services, market prices, supply and demand across economic sectors, trade across regions, and aggregate performance metrics like GDP. We use the integrated model to analyze the …

Global Drivers Of Local Water Stresses And Global Responses To Local Water Policies In The United States, Iman Haqiqi, Laura Bowling, Sadia Jame, Uris Baldos, Jing Liu, Thomas Hertel

Department of Agricultural Economics Faculty Publications

The rapid depletion of US groundwater resources and rising number of dying wells in the Western USbrings attention to the significance of groundwater governance and sustainability restrictions. However, such restrictions on groundwater withdrawals are likely to generate spillover effects causing further environmental stresses in other locations and adding to the complexity of sustainability challenges. The goal of this paper is to improve our understanding of the implications of growing global food demand for local sustainability stresses and the implications of local sustainability policies for local, regional, and global food production, land use, and prices. We employ SIMPLE-G-US (Simplified International Model …

Labor Markets: A Critical Link Between Global-Local Shocks And Their Impact On Agriculture, Srabashi Ray, Iman Haqiqi, Alexandra E. Hill, J Edward Taylor, Thomas Hertel

Department of Agricultural Economics Faculty Publications

Labor markets can shape the impacts of global market developments and local sustainability policies on agricultural outcomes, including changes in production and land use. Yet local labor market outcomes, including agricultural employment, migration and wages, are often overlooked in integrated assessment models (IAMs). The relevance of labor markets has become more important in recent decades, with evidence of diminished labor mobility in the United States (US) and other developed countries. We use the SIMPLE-G (Simplified International Model of agricultural Prices, Land use, and the Environment) modeling framework to investigate the impacts of a global commodity price shock and a local …

The Global Trade Analysis Project (Gtap) Data Base: Version 11, Angel Aguiar, Maksym Chepeliev, Erwin Corong, Dominique Van Der Mensbrugghe

Department of Agricultural Economics Faculty Publications

This paper describes the construction of the GTAP Data Base, version 11. The database reconciles different data sources at a global scale for analytical use and provides time series data on value flows, volumes, and various tax instruments. GTAP version 11 has 5 reference years (2004, 2007, 2011, 2014, and 2017), distinguishes 65 sectors in each of 141 countries and 19 aggregate regions - with individual countries accounting for 99.1% of world GDP and 96.4% of world population. The exhaustive nature of GTAP in its country and sector coverage facilitates its use in economy-wide studies of global economic issues.

Reducing Us Biofuels Requirements Mitigates Short-Term Impacts Of Global Population And Income Growth On Agricultural Environmental Outcomes, David R. Johnson, Nathan B. Geldner, Jing Liu, Uris Baldos, Thomas Hertel

Department of Agricultural Economics Faculty Publications

Biobased energy, particularly corn starch-based ethanol and other liquid renewable fuels, is a major element of federal and state energy policies in the United States. These policies are motivated by energy security and climate change mitigation objectives, but corn ethanol does not substantially reduce greenhouse gas emissions when compared to petroleum-based fuels in all production scenarios. Corn production also imposes substantial negative externalities (e.g., nitrogen leaching, higher food prices, water scarcity, and indirect land use change). In this paper, we utilize a partial equilibrium model of corn-soy production and trade to analyze the potential of reduced US demand for corn …

Local, Regional, And Global Adaptations To A Compound Pandemic-Weather Stress Event, Iman Haqiqi, Danielle S. Grogan, Marziyeh Bahalou Horeh, Jing Liu, Uris Baldos, Richard Lammers, Thomas W. Hertel

Department of Agricultural Economics Faculty Publications

Global food security can be threatened by short-term extreme events that negatively impact food production, food purchasing power, and agricultural economic activity. At the same time, environmental pollutants like greenhouse gases (GHGs) can be reduced due to the same short-term extreme stressors. Stress events include pandemics like COVID-19 and widespread droughts like those experienced in 2015. Here we consider the question: what if COVID-19 had co-occurred with a 2015-like drought year? Using a coupled biophysical-economic modeling framework, we evaluate how this compound stress would alter both agricultural sector GHG emissions and change the number of undernourished people worldwide. We further …

The Poverty Impacts Of Labor Heat Stress In West Africa Under A Warming Climate, W. Saeed, I. Haqiqi, Q. Kong, M. Huber, J. R. Buzan, S. Chonabayashi, K. Motohashi, T. W. Hertel

Department of Agricultural Economics Faculty Publications

This paper assesses the poverty implications of heat stress-related labor capacity losses based on simulations using a global general equilibrium economic model. Compared with past studies, we use a more precise measurement of heat stress, assign labor capacity losses to specific labor types by sector, and employ an economic model that contains highly disaggregated economic sectors and regions. This model allows us to determine global and regional economic impacts that account for international dependencies. We focus attention on seven West African countries for which we determine the implied changes in real incomes of households near the poverty line. For these …

Costs Of Forest Carbon Sequestration In The Presence Of Climate Change Impacts, Alla Golub, Brent Sohngen, Yongyang Cai, John Kim, Thomas Hertel

Department of Agricultural Economics Faculty Publications

Forests play a critical role in mitigating climate change, and, at the same time, are predicted to experience large-scale impacts of climate change that will affect the efficiency of forests in mitigation efforts. Projections of future carbon sequestration potential typically do not account for the changing economic costs of timber and agricultural production and land use change. We integrated a dynamic forward-looking economic optimization model of global land use with results from a dynamic global vegetation model and meta-analysis of climate impacts on crop yields to project future carbon sequestration in forests. We find that the direct impacts of climate …

Putting The Green Back In Greenbacks: Opportunities For A Truly Green Stimulus, Farzad Taheripour, Maksym Chepeliev, Richard Damania, Thomas Farole, Nancy Lozano Gracia, Jason Daniel Russ

Department of Agricultural Economics Faculty Publications

Can countries reorient their productive capacity to become more environmentally friendly and inclusive? To investigate this question this paper uses a standard Input-Output modeling framework and data from 141 countries and regions to construct a new global dataset of employment, value-added, greenhouse gas (GHG) emissions (disaggregated into CO2 and Non-CO2 elements), and air pollution (including nine categories of air pollutants such as PM2.5) multipliers from supply side investments. We find that many of the traditional sectors in agriculture and industry have large employment multipliers, but also generate male dominant, lower skill employment, and tend to have higher emission multipliers. It …

Developing An Air Pollutant Emissions Database For Global Economic Analysis, Maksym Chepeliev

Department of Agricultural Economics Faculty Publications

According to the Global Burden of Disease study (Cohen et al., 2017), in 2015 ambient air pollutant emissions caused 4.2 million deaths and a loss of 103.1 million disability-adjusted life-years, making it the fifth-ranked global risk factor. In terms of the welfare costs of mortality and illnesses associated with outdoor air pollutant emissions, global estimates for 2015 range between $2.7-3.2 trillion (Coady et al., 2015; OECD, 2016). Still, while greenhouse gas emissions are usually well represented in many global economic databases and models, air pollutant emission accounts in most cases are not included. In particular, this is the case for …

Disaggregating The Vegetables, Fruits And Nuts Sector To The Tariff Line In The Gtap-Hs Framework, Maksym Chepeliev, Alla Golub, Thomas Hertel, Wajiha Saeed, Jayson Beckman

Department of Agricultural Economics Faculty Publications

Computable general equilibrium (CGE) models provide valuable insights into economy-wide and aggregate sectoral impacts of trade policies. However, when it comes to the assessment of specific interventions, the level of aggregation in these models is often deemed too coarse to inform negotiations. For example, in the Global Trade Analysis Project (GTAP) Data Base, all vegetables, fruits and nuts - over hundred individual commodities - are represented under one sector. Analysis at the tariff line level is typically provided by partial equilibrium (PE) models, which cannot, however, capture economy-wide effects. In this paper, we contribute to the development of the GTAP-HS …

Possible Implications Of The European Carbon Border Adjustment Mechanism For Ukraine And Other Eu Trading Partners, Maksym Chepeliev

Department of Agricultural Economics Faculty Publications

This paper provides a quantitative assessment of the European Carbon Border Adjustment Mechanism (CBAM) implementation. We find limited impacts of the CBAM for most European Union (EU) trading partners. Ukraine is the most impacted country, with a per capita income change of -0.4% and reductions in domestic iron and steel production reaching 3.9%. Global exports of chemical products are impacted the most, with corresponding reductions exceeding 4% in some countries.

Gtap-Power Data Base: Version 10, Maksym Chepeliev

Department of Agricultural Economics Faculty Publications

This paper documents changes introduced to version 10 of the Global Trade Analysis Project (GTAP) Power (GTAP-Power 10) Data Base construction process relative to the GTAP-Power build stream developed in Peters (2016). First, in Peters (2016) output of the electricity and heat generation sector was split into different technologies using electricity generation data only. We use heat and electricity generation volumes to provide a more representative sectoral split and achieve a better concordance with GTAP 10 Data Base sectoral definitions. Second, we introduce data on country and year-specific shares of transmission and distribution costs in electricity price for 80 countries. …

The Gtap Data Base: Version 10, Angel Aguiar, Maksym Chepeliev, Erwin Corong, Robert Mcdougall, Dominique Van Der Mensbrugghe

Department of Agricultural Economics Faculty Publications

This paper highlights the numerous improvements to the Global Trade, Assistance, and Production (GTAP) Data Base, version 10 (also referred to as GTAP 10). The Data Base describes the world economy for 4 reference years (2004, 2007, 2011, and 2014) and distinguishes 65 sectors, up from 57 in the previous release, in each of the 141 countries/regions. The 121 countries in the Data Base account for 98% of world GDP and 92% of world population. For each country/region, the Data Base reports production, intermediate and final uses, international trade and transport margins, and taxes/subsidies. This Data Base underlies most, if …

Including Fossil-Fuel Consumption Subsidies In The Gtap Data Base, Maksym Chepeliev, Robert Mcdougall, Dominique Van Der Mensbrugghe

Department of Agricultural Economics Faculty Publications

Historically fossil-fuel consumption subsidies have been one of the most widely used energy and public policy interventions. According to the International Energy Agency (IEA), in 2014 they amounted to $493 billion worldwide, which is equivalent to 0.6% of global GDP. Their contribution is even more significant for most energy exporting countries, in many cases exceeding 5-15% of national GDP. However, despite their large magnitude, fossil-fuel consumption subsidies are not explicitly represented in most global economic databases and models, including the Global Trade Analysis Project (GTAP) Data Base, as they are generally not captured by the input-output framework. In this paper, …