PROGRAM TITLE: 	Economics of Global Change and U.S. Agriculture
SCIENCE ELEMENT: 	Food and Agriculture, Economics

Economic Research Service

SCIENTIFIC MERIT:  The research program examines resource issues 
and policies with inherently international dimensions and assesses their 
implications for U.S. Agriculture. The program emphasizes the economic 
effects of (a) climate change and (b) international environmental agreements. 
Recent accomplishments  include: (a) publication of a book, refereed journal 
articles, and government reports on the economic effects of climate change on 
world agriculture, (b) development of a global general equilibrium model 
linking food needs and supplies to climate-related changes in land and water 
resources, and (c) working papers/reports on the impacts of environmental 
policy on innovation, decision-making under uncertainty, and assessment of 
programs to preserve  biodiversity.
Quality assurance is provided by peer-review within agency, publication in 
 refereed journals, and collaborative research with and feedback from 
universities and other institutions. Continuing jointly funded research is 
ongoing with the following institutions: Massachusetts Institute 
of Technology, University of Chicago, Yale University, University of 
California at Berkeley, Cornell University, University of Michigan, 
University of California at Davis, Wesleyan University, University of 
Minnesota, Purdue University, the Energy Policy Research Institute, and the 
Australian Industries and Trade  Commission.
The principal question the climate change program is addressing is the open-
economy impacts of changes in land and water resources. Previous research 
 on the impacts of climate change on U.S. agriculture has not explicitly 
considered competition for land and water by different sectors in a general 
equilibrium setting. Preliminary results are expected by the end of 
FY94. The FY95 program will improve the intertemporal aspects of the 
model. Ongoing research will focus on the role of adaptation and 
technological change. 
A recent National Academy of Sciences report concluded that conversion 
of natural habitats to agriculture is a main cause of biodiversity loss. 
The main issues addressed by biodiversity research will be the economic 
factors leading to habitat loss and the effectiveness of preservation programs.
STAKEHOLDERS:  Research activities convening lead authorship of the 
IPCC Working Group II Subgroup D (Agriculture) Assessment and serving as 
part of the  Editorial Working Group for an International Assessment of 
Global Climate Change and the Social Sciences. Climate change research is 
intended to provide agricultural-sector specific information for Working 
Group III of the IPCC. Information would also be useful for analyzing effects 
of National Action Plan  policies on agriculture. Biodiversity research in 
intended to provide information about the economic impacts of the U.N. 
Convention onÊBiological ÊDiversity.
POLICY RELEVANCE:  The program will examine the impacts of climate 
change on:  (a) the comparative advantage of U.S. agriculture relative to 
major trade competitors, (b) agricultural sector variables such as farm 
income, farm employment, agricultural land use and values, and water use, 
and (c) impacts on food processing industry and consumer food prices. The 
short-term payoffs will be information about economy-wide impacts of land 
and water resource constraints and about the effects of climate change on 
trade flows. Research will explicitly examine economics of land use decisions. 
The short-term regional focus will be in the U.S., other OECD countries and 
Pacific Rim countries. Longer-term information will examine the role of 
agricultural research and endogenous technological change. Research would 
also provide long-term information about income distribution and food 
The biodiversity component of the program will evaluate the 
effectiveness of technical assistance programs for biodiversity preservation 
currently funded by U.S. Federal agencies (USAID, Forest Service, ARS) and 
multilateral donor agencies (World Bank, CGIAR).