Chapter 17 - Economics of adaptation

This chapter assesses the literature on the economics of climate change adaptation, building on the Fourth Assessment Report (AR4) and the increasing role that economic considerations are playing in adaptation decisionmaking and policy. AR4 provided a limited assessment of the costs and benefits of adaptation, based on narrow and fragmented sectoral and regional literature (Adger et al, 2007). Substantial advances have been made in the economics of climate change adaptation after AR4

The Net Global Effects of Alternative U.S. Biofuel Mandates

One of the declared objectives of U.S. biofuel policy is the reduction of greenhouse gas (GHG) emissions from fossil fuel combustion, but many studies have questioned whether such a reduction would actually occur and, if so, how large it would be. This report describes the global market, land use, GHG emissions, and nitrogen use impacts of the U.S. Renewable Fuel Standard (RFS2) and several alternative biofuel policy designs, which differ in terms of mandate magnitude and feedstock composition, over the 2010-2030 period

How can dairies maximize their profits and properly remunerate their dairy farmers?

ABSTRACT The current pricing process of raw milk in Brazil discourages producers from improving milk composition, which affects both yield and quality of dairy products. Furthermore, small and medium-sized dairies face great difficulties when it comes to planning production. Thus, a linear programming model was developed to price the raw milk and determine the optimal mix (combination of quantities) of dairy products that maximizes total contribution margin (TCM) under daily scenarios of high (January) and low (July) raw milk supplies (summer and winter, respectively) by comparing optimal solutions with actual results. The TCM of optimal and actual mixes were higher in January due to the greater availability of raw material. Packaging was a limiting factor in the production of cheese in optimal mixes. The relationship between unit contribution margin (UCM) and the required amount of raw materials per product unit and resource availability is crucial to defining the mix of dairy products and TCM of the dairy. Casein and raw milk volume showed shadow prices. Under both scenarios, the calculated prices of raw milk were higher than the prices charged by the dairy and were higher in January. The proposed model remunerates the producers based on the quantity and quality of raw milk. The dairy can maximize its TCM by better planning its mix of products with the use of linear programming

Implications of a carbon-based energy tax for U.S. agriculture

Policies to mitigate greenhouse gas emissions are likely to increase energy prices. Higher energy prices raise farmer costs for diesel and other fuels, irrigation water, farm chemicals, and grain drying. Simultaneously, renewable energy options become more attractive to agricultural producers. We consider both of these impacts, estimating the economic and environmental consequences of higher energy prices on U.S. agriculture. To do this we employ a price-endogenous agricultural sector model and solve that model for a range of carbon-tax-based energy price changes. Our results show mostly positive impacts on net farm income in the intermediate run. Through market price adjustments, fossil fuel costs are largely passed on to consumers. Additional farm revenue arises from the production of biofuels when carbon taxes reach $30 per ton of carbon or more. Positive environmental benefits include not only greenhouse gas emission offsets but also reduced levels of nitrogen leaching

Agriculture and climate beyond 2015: a new perspective on future land use patterns

Interactions between agriculture, climate and patterns of land use are complex. Major changes in agriculture, and land use patterns are foreseen in the next couple of decades in response to shifts in climate, greenhouse gas management initiatives, population growth and other forces. The book explores key interactions between changes in agriculture, patterns of land use and efforts to reduce greenhouse emissions from agriculture. The volume is based on inter-disciplinary science and policy interactions, exploring the way land use may aid in addressing or be affected by the onset of climate change and alterations in food demand. Future forces shaping land use decisions are examined, and its sensitivity to climate change is highlighted. Patterns of land use and the agricultural role in climate change mitigation are explored. Also, policy and social responses to the new perspectives on future land use patterns are identified. The perspective of the book is beyond the year 2015

The Equivalence of Tariffs and Quotas under a Tariff-Rate Quota System: A Case Study of Rice

This study examines the effect of tariff-rate quota (TRQ) expansions as have emerged from the international trade negotiations that are designed to ensure market access for many sensitive agricultural products. We extend the existing models on tariff-quota equivalence to a TRQ system. Our theoretical finding indicates that the equivalence of domestic price between out-quota tariff reduction and quota expansion depends on domestic producer's behavior and on the values of conjectural variation. An empirical spatial equilibrium model of international rice trade is used to examine the price and welfare impacts of replacing quota expansions with tariff reductions

Adapting the National Input-Output Tableau into a Constrained Optimization Framework for Analyzing Energy Utilization

This study attempted to further portray the economy and its relationship with the energy system giving results derived from the total interrelated system