General Equilibrium Simulations for Foresight Food Project
This document summarizes the use of a general equilibrium model to simulate scenarios for the Foresight Future of Food and Farming Project. The model, called Globe, is a multi-country trade model that simulates the global economy and commodity markets under different supply and demand conditions. Several scenarios are examined, including drought in major producing regions, increased agricultural protectionism, rising meat demand in China and India, and the impacts of fossil fuel scarcity and climate change mitigation. The model results indicate that international trade helps alleviate the effects of localized supply shocks. Protectionism tends to amplify stresses on the food system through higher prices. Rising livestock demand has modest effects on crop prices and production with free trade.
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General Equilibrium Simulations for Foresight Food Project
- 1. General Equilibrium Simulations for the Foresight Future of Food and Farming Project Sherman Robinson December 2010
- 3. Driver Review Publication: The Philosophical Transactions of the Royal Society B
- 5. Drivers in the Food system
- 6. Projected demand for food
- 7. Projected supply of food
- 9. State of science reviews
- 10. Workshops
- 12. Modelling initiative with IFPRI & IDSRelease on January 25, 2011
- 13. Globe general equilibrium model to supplement IFPRI results Multi-country, trade-focused, CGE model using the GTAP global data set Simulates the operation of national economies operating in global markets Solves for market clearing commodity prices and quantities (production and trade), both nationally and globally, given supply and demand in all markets Comparative static simulations 3
- 14. Selected scenarios Drought in NAFTA, China, and India With and without agricultural export restrictions in exporting countries in response to rising prices Doha failure: general increase in trade protectionism Increased meat demand in India and China Fossil fuel scarcity: climate change mitigation and/or peak oil 4
- 15. Drought: Largest price impacts where drought occurs 5 China, India, NAFTA
- 16. … Drought plus export limits changes trade flow volumes in different directions 6
- 17. Doha failure and more protection: Food prices rise everywhere 7
- 18. Increased India and China meat demand: Small effects on crop prices 8
- 19. … and crop production. 9
- 20. Fossil Fuel Scarcity: Welfare gains for exporting countries 10
- 21. Oil scarcity versus energy taxes: Indirect effects are small 11
- 22. Oil scarcity versus taxes: Changes in world food crop prices are small 12
- 23. Conclusions from CGE analysis International trade is important Ameliorates unequal distribution of supply-side shocks (e.g., droughts and climate change) Increases in protectionism amplify stresses on the food system by increasing prices and encouraging production in less suitable areas Increases in demand for livestock products in large countries such as China and India lead to modest increases in world food prices, with free trade Protectionist response leads to bigger price effects 13