PROGRAM TITLE: Economics of Global Change and U.S. Agriculture ACTIVITY STREAM: Assessment SCIENCE ELEMENT:
Food and Agriculture, Economics U.S. DEPARTMENT OF AGRICULTURE Economic Research ServiceSCIENTIFIC 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 security. 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).