RECENT DEVELOPMENTS IN EU POLICIES – CHALLENGES FOR PARTIAL EQUILIBRIUM MODELS

This paper gives an overview on current and prospective modelling challenges for agricultural partial equilibrium (PE) models focussing on EU policies. Starting from a certain policy context, the paper highlights the current capabilities and limitations of existing PE models and, if available, develops some ideas on future modelling directions to advance the usefulness of quantitative information provided.Policy impact assessment, agricultural partial equilibrium models, Common Agricultural Policy, Agricultural and Food Policy, Research Methods/ Statistical Methods,

A Path Algorithm for Constrained Estimation

Many least squares problems involve affine equality and inequality constraints. Although there are variety of methods for solving such problems, most statisticians find constrained estimation challenging. The current paper proposes a new path following algorithm for quadratic programming based on exact penalization. Similar penalties arise in $l_1$ regularization in model selection. Classical penalty methods solve a sequence of unconstrained problems that put greater and greater stress on meeting the constraints. In the limit as the penalty constant tends to $\infty$, one recovers the constrained solution. In the exact penalty method, squared penalties are replaced by absolute value penalties, and the solution is recovered for a finite value of the penalty constant. The exact path following method starts at the unconstrained solution and follows the solution path as the penalty constant increases. In the process, the solution path hits, slides along, and exits from the various constraints. Path following in lasso penalized regression, in contrast, starts with a large value of the penalty constant and works its way downward. In both settings, inspection of the entire solution path is revealing. Just as with the lasso and generalized lasso, it is possible to plot the effective degrees of freedom along the solution path. For a strictly convex quadratic program, the exact penalty algorithm can be framed entirely in terms of the sweep operator of regression analysis. A few well chosen examples illustrate the mechanics and potential of path following.Comment: 26 pages, 5 figure

A Comparison of Intercountry Agricultural Production Functions: A Frontier Function Approach

Unlike the work by Hayami and Ruttan in the 1970s, this study utilizes frontier meta- production functions to study intercountry agricultural productivity differences. Technical efficiency differences are examined through estimation of deterministic and stochastic frontiers for 43 countries over 1960, 1970 and 1980. In most cases, developed countries on average have higher technical efficiency levels. However, not all developed countries are fully technically efficient while certain developing countries perform comparably with other developed countries. The results also show that the productivity gap between developing and developed countries has increased over time. Yet there is potential to improve productivity of developing countries, especially by expanding their human capital stock, as indicated by high output elasticities for primary and secondary education and technical education.

New directions in water resources management: The role of water pricing policies

Water resources will face increasing competition and higher environmental concerns during this century. To meet these challenges, the new Water Framework Directive has drawn up an integrated framework and established the basic principles for a sustainable water policy in the European Union. The introduction of water prices reflecting the true cost of irrigation is one of its most innovative components. In this paper, a positive mathematical programming model is developed to assess the environmental and socio-economic impacts of water pricing policies in Spanish irrigated lands. The model interface allows friendly use and easy replication in a large number of irrigation districts, selected throughout the Spanish territory. The model results show the impact on environmental indicators, water consumption, cropping patterns, technology adoption, labor, farmers' income, and the water agency revenues when different scenarios of cost recovery are considered. It is argued that this modeling approach may be used as a management tool to assist in the implementation of the cost recovery approach of the new Water Framework Directive

VERIFICATION OF LINEAR PROGRAMMING SOLUTIONS, WITH EMPHASIS ON SUPPLY IMPLICATIONS

Demand and Price Analysis,

Agricultural Sector Programming Models: A Review of Alternative Approaches

As part of IIASA's Food and Agricultural Program, the research project "Limits and Consequences of Food production Technologies" addresses the question of "what long-term technical development paths are feasible and likely for increasing food production, based on the present availability of resources (including energy), the long-run feedback on the environment, and the short-run pressures reflected in current agricultural policies" (see IIASA, Research Plan 1980-1984). It is aimed at developing models that (a) describe the interactions between resources, technologies and environment in agricultural production systems and (b) provide means for the determination of policies that help countries to cope with the rising demand for food. The paper discusses various alternative approaches based on programming models. It emphasizes the organizational aspect of the problem which is typical for agricultural production systems in both market economies and centrally planned economies. The models are basically two-level decision systems where the policy bodies influence agricultural production by formulating guidelines (prices, quotas, etc.) that allow the individual production units some flexibility in the determination of their production activities