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The main tool kit for our project: Jordmod – a partial equilibrium model of Norwegian agriculture Ivar Gaasland (SNF)

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Presentation on theme: "The main tool kit for our project: Jordmod – a partial equilibrium model of Norwegian agriculture Ivar Gaasland (SNF)"— Presentation transcript:

1 The main tool kit for our project: Jordmod – a partial equilibrium model of Norwegian agriculture Ivar Gaasland (SNF)

2 Outline 1. General characteristics of Jordmod 2. Adaptation at the farm level – Model Farm illustration 3. Adaptation at the sector level – Climate policy scenario 4. Improvement of model – on-going work 5. Use of model - potential

3 General characteristics Model class Partial equilibrium model (small sector assumptions) Small country assumption Comparative static model Long run perspective Domestic and foreign products perfect substitutes

4 General characteristics north Price S south-west P W D Milk production

5 General characteristics Optimization model Max: producers + importers + consumers surplus subject to: 1)available land 2) regulations 3) policy targets Policy analysis optimal policy subject to policy targets exogenous policy instruments, like: Subsidies of various kinds Import tariffs and quotas Emission taxes or quotas

6 General characteristics 32 production regions (e.g., western Norway) 11 model farm types (e.g., combined milk and beef) 15 products (e.g., milk and beef) 8 intermediaries (e.g., grass fodder) 4 land qualities arable land, food grain arable land, other surface tilled land infield pasture 32 regions

7 Example model farm - milk and beef production Western Norway Separate supply module that constructs model farms for given relative prices, technology, and natural restrictions 36 activities to choose among Most inputs are proportional to the number of animals and land units, but endogenous: Plant yield per land unit = f(nitrogen) Milk production per cow = g(fodder) Functions and coefficients for GHG emission have been attached to activities and production factors IPCC methodology, adapted to Norwegian conditions and practices)

8 Milk and beef production Western Norway – current policy Activities Dairy cows (#)20 Animals (total #)58 Farm land (haa) Mowed grassland, tilled Mowed grassland, no-till0,0 - Infield grazing, no-till7.8 Production Milk (1000 kg)118 Meat (1000 kg)5 Fodder, mowed grass (1000 feed units)85 Fodder, pasture (1000 feed units)25 Economic indicators Net subsidies (1000 NOK)417 CO2 tax (1000 NOK)0 Labour (person-years)1.9 Residual wage (1000 NOK per person-year)197

9 Milk and beef production Western Norway – current policy Intensity plant production Nitrogen (kg per ha)187 Yield (feed units pr ha)3 776 No-till share of land use27 % Intensity milk production Milk per cow (1000 kg)5.9 Gross energy per cow (MJ/cow/day)295 Roughage share of fodder intake69 % GHG emissions (CO2 equivalents; 1000 kg) Methane (CH4)120.2 Nitrous oxide (N2O) 40.9 Carbon oxide (CO2) land 41.8 Total GHG emissions203.0 kg pr ha6967 kg pr kg milk1.72

10 Milk and beef production Western Norway – carbon tax Current policyCarbon tax Activities Dairy cows (#)20 Animals (total #)5857 Farm land (haa) Mowed grassland, tilled Mowed grassland, no-till0, Infield grazing, no-till Production Milk (1000 kg) Meat (1000 kg)55 Fodder, mowed grass (1000 feed units)8587 Fodder, pasture (1000 feed units)2526 Economic indicators Net subsidies (1000 NOK) CO2 tax (1000 NOK)096 Labour (person-years)1.9 Residual wage (1000 NOK per person-year)197168

11 Milk and beef production Western Norway – carbon tax Current policy Carbon tax% change Intensity; plant production Nitrogen (kg per ha) % Yield (feed units pr ha) % No-till share of land use27 %43 %59.1 % Intensity; milk production Milk per cow (1000 kg) % Gross energy pr cow (MJ/cow/day) % Roughage share of fodder intake69 %60 %-13.0 % GHG emissions (CO2 equivalents; 1000 kg) Methane (CH4) % Nitrous oxide (N2O) ,0-2.3 % Carbon oxide (CO2) land % Total GHG emissions % kg pr ha % kg pr kg milk %

12 Adaptation at the sector level – climate policy analysis GHG emission target: 30 percent reduction in GHG emission compared to base solution Policy assumptions: Current policy as a point of departure Market access and export subsidy commitment as in the Doha proposal Carbon tax: NOK 300 per ton GHG emissions Production and land use as high as possible subject to these requirements

13 Climate policy analysis Base solutionCarbon tax% change Production (mill kg) Milk % Beef and veal % Sheep % Pig % Poultry % Eggs % Grains % Potatoes % Total production (index) % Land use (1000 ha) % Share tilled % N per ha, wheat % N per ha, grassland % GHG emission (CO2 equiv. mill. kg) Enteric fermentation % Manure management % Fertilizer, manure % Fertilizer, syntetic % Net emmision land use % Total GHG emission % kg per ha %

14 Climate policy analysis Base solutionGHG tax% change Support (billion NOK) Budget support % Market price support % GHG tax Total support % Abatement costs is negative in agriculture if no value is attributed to agricultural activity beyond the world market price of food

15 Improvements of model - on-going work Data Regional differences in emission or sequestration with respect to land use (e.g., till/no-till; forest) at different land types (e.g., cultivated wetland; mineral soil) Nationally adapted emission coefficients Technologies Restoration of wetland, forest, biogas, bio-char Model aspects Dynamic aspects handled in a comparative static model Permanence

16 Use of model –potential Cost-benefit analysis of different ways to reduce GHG emissions from agriculture Trade-offs between policy objectives, e.g., emission cut vs.: production targets land amenities values What if carbon sequestration on agricultural land is credited?


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