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Application of Multi-Commodity Partial Equilibrium Model to Quantify the Welfare Benefits of Research

Author

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  • Nedumaran, S.
  • Bantilan, Ma Cynthia S.
  • Mason-D'Croz, Daniel
  • Singh, Piara

Abstract

Most of the research evaluation and priority setting studies in the past are not likely to incorporate the cross-commodity effects in the estimation of welfare benefits since the cross-price elasticities are often unavailable and cross-commodity spillovers of technologies may be difficult to estimate. This paper also illustrates how the multi-commodity framework is suitable in addressing longer term trends in quantifying future welfare gains and their implications for resource allocation for dryland crops namely sorghum and groundnuts. To address these gaps, this paper will highlight the application of multi-commodity partial equilibrium model called International Model for Policy Analysis of Agricultural Commodities and Trade (IMPACT) to estimate the welfare benefits of sorghum and groundnuts research. The modelling framework also integrates crop modelling suite, hydrology model, climate models and welfare analysis. This model will endogenously estimate the changes in the production, consumption and prices due to adoption of new productivity enhancing technologies and also estimate the changes in the other commodities demand, supply and prices through cross price elasticities effects. The returns to research investment for developing these promising cultivars and dissemination in the target countries were also estimated. The potential global net benefits derived from adoption of heat and drought tolerant cultivar in the target counties are about $302.39 million and $784.08 million with IRR of 30% and 41% respectively. The promising technology with combination of three traits (drought tolerance, heat tolerance and increased yield potential) will produce potential net benefits of $1.5 billion with IRR of 50%.

Suggested Citation

  • Nedumaran, S. & Bantilan, Ma Cynthia S. & Mason-D'Croz, Daniel & Singh, Piara, 2014. "Application of Multi-Commodity Partial Equilibrium Model to Quantify the Welfare Benefits of Research," 2014 Conference (58th), February 4-7, 2014, Port Macquarie, Australia 165879, Australian Agricultural and Resource Economics Society.
    • Handle: RePEc:ags:aare14:165879
    DOI: 10.22004/ag.econ.165879
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    References listed on IDEAS

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    Agricultural and Food Policy; Financial Economics; Political Economy;
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