Modeling Shifts in Agricultural Land as a Consequence of Different Agricultural Policies

The impact of globalization on trade, production and land-use was key to the Doha development round. This paper deals with the complex interaction between agricultural trade regimes, production and land-use given two key uncertainties. Firstly, a world where Doha and subsequent rounds succeed and globalization proceeds versus a world that moves to regionalism with a stronger orientation towards bilateral and regional trade agreements. Secondly, a world that focuses on economic incentives and economic growth and a limited role for the government versus a world where public and private institutions value also the environment. These two key uncertainties lead to a world that can evolve in four directions. This paper presents a dovetailing of an economic (GTAP) and a bio-physical (IMAGE) model. The methodology is innovative as it combines state of the art knowledge. First, the treatment of agriculture and land use is improved in the economic model. For example, information from the OECD Policy Evaluation Model (PEM) was incorporated to improve the agricultural production structure. The new land allocation method that was introduced takes into account the variation of substitutability between different types of land use. The new land supply curve that was introduced facilitates the conversion of idle land to productive land or the other way while given consideration to the level of intensification. Secondly, the adapted economic model is linked to the ecological-environmental modeling framework IMAGE allowing feedbacks of heterogeneous information of land productivity to the economic framework. While often a rather pessimistic picture is portrayed for future developments of the agricultural sector in the EU (especially in liberalizing scenarios), results show that changes in the use of land for agricultural purposes will not be very distinctive for the EU25 the coming 30 years. Changes in land use will mainly be driven by (global) food demand factors such as GDP and population growth. The negative impact of liberalization of agricultural policies on land use is small because on the one hand loss in EUs competitiveness leads partly to extensification instead of land abandonment, and secondly, the recent agricultural reforms of the EU changed the protection from market to income support which has less production effects. Changes in land use will be dramatic for Africa. In this part of the world, area of agricultural land use will increase up to 70 % over 30 years.