Survey of Land Representation in Economic and Biophysical Models

Economic models used for analysis of climate impacts or alternative climate policies are continually evolving to better handle agriculture, forestry, biofuels, and the competition for land among these uses. Ideally, these economic models should be linked to biophysical models that simulate crop or forest growth under varying conditions such as climate, soil, and fertilizer application. However, the biophysical models usually operate on much smaller time steps and geographical areas than the economic models. This paper surveys the way that land is represented in biophysical and economic models commonly used in analysis of climate impacts or climate policy. The survey covers both the representation of land and the economics of land competition in partial and general equilibrium models. A well-known example of a partial-equilibrium model is the Forest and Agricultural Sector Optimization Model (FASOM). An example of a general equilibrium model is the Global Trade Analysis Project (GTAP) model. FASOM covers only the United States, but simulates trade in agricultural products with other countries using external demand relationships. The GTAP model has full bilateral trade between world regions. A biophysical model such as EPIC simulates the way that various crops grow under varying climate, soil, and management practices. EPIC can also provide some indication of the amount of carbon stored in soils and emissions of methane or nitrous oxide. This paper addresses the following questions: How can we link biophysical and economic models? What options are available for the economic models to use information from biophysical models? Are there ways to modify economic models so they capture more of the insights provided by biophysical models? These questions are important as the biophysical models provide information on how managed agriculture responds to climate change, and the tradeoffs between various crop management practices.