Labour Supply Curves for EU Member and Candidate States: An applied general equilibrium analysis. Factor Markets Working Paper No. 26, June 2012

This paper introduces a more sophisticated modelling of the labour market functioning of the European member and candidate states through the introduction of labour supply curves in an applied general equilibrium model. A labour supply curve offers a middle way in labour supply modelling, sitting between the two commonly adopted extremes of spare capacity and full employment. The first part of the paper outlines the theoretical foundation of the labour supply curve. Real world data is then used to derive labour supply curves for each member state, along with Croatia and Turkey. Finally, the impact of the newly specified labour markets on the results of an illustrative scenario involving reform of the common agricultural policy is explored. The results of computable general equilibrium analysis with the labour supply curve confirm the theoretical expectation that modelling the labour supply through an upwards-sloping curve produces results that lie between the extremes of spare capacity of the labour factor and fully employed labour. This specification captures a greater degree of heterogeneity in the labour markets of the member and candidate states, allowing for a more nuanced modelling of the effects of policy reform, including welfare effects

Factor Markets in Applied Equilibrium Models: The current state and planned extensions towards an improved presentation of factor markets in agriculture. Factor Markets Working Paper No. 23, February 2012

This paper describes how factor markets are presented in applied equilibrium models and how we plan to improve and to extend the presentation of factor markets in two specific models: MAGNET and ESIM. We do not argue that partial equilibrium models should become more ‘general’ in the sense of integrating all factor markets, but that the shift of agricultural income policies to decoupled payments linked to land in the EU necessitates the inclusion of land markets in policy-relevant modelling tools. To this end, this paper outlines options to integrate land markets in partial equilibrium models. A special feature of general equilibrium models is the inclusion of fully integrated factor markets in the system of equations to describe the functionality of a single country or a group of countries. Thus, this paper focuses on the implementation and improved representation of agricultural factor markets (land, labour and capital) in computable general equilibrium (CGE) models. This paper outlines the presentation of factor markets with an overview of currently applied CGE models and describes selected options to improve and extend the current factor market modelling in the MAGNET model, which also uses the results and empirical findings of our partners in this FP project

RED vs. REDD: Biofuel Policy vs. Forest Conservation. Factor Markets Working Document No. 41, May 2013

This paper assesses the complex interplay between global Renewable Energy Directives (RED) and the United Nations programme to Reduce Emissions from Deforestation and forest Degradation (REDD). We examine the interaction of the two policies using a scenario approach with a recursive-dynamic global Computable General Equilibrium model. The consequences of a global biofuel directive on worldwide land use, agricultural production, international trade flows, food prices and food security out to 2030 are evaluated with and without a strict global REDD policy. We address a key methodological challenge of how to model the supply of land in the face of restrictions over its availability, as arises under the REDD policy. The paper introduces a flexible land supply function, which allows for large changes in the total potential land availability for agriculture. Our results show that whilst both RED and REDD are designed to reduce emissions, they have opposing impacts on land use. RED policies are found to extend land use whereas the REDD policy leads to an overall reduction in land use and intensification of agriculture. Strict REDD policies to protect forest and woodland lead to higher land prices in all regions. World food prices are slightly higher overall with some significant regional increases, notably in Southern Africa and Indonesia, leading to reductions in food security in these countries. This said, real food prices in 2030 are still lower than the 2010 level, even with the RED and REDD policies in place. Overall this suggests that RED and REDD are feasible from a worldwide perspective, although the results show that there are some regional problems that need to be resolved. The results show that countries directly affected by forest and woodland protection would be the most economically vulnerable when the REDD policy is implemented. The introduction of REDD policies reduces global trade in agricultural products and moves some developing countries to a net importing position for agricultural products. This suggests that the protection of forests and woodlands in these regions reverses their comparative advantage as they move from being land-abundant to land-scarce regions. The full REDD policy setting, however, foresees providing compensation to these countries to cover their economic losses

Factor Markets in General Computable Equilibrium Models. Factor Markets Working Document No. 47, May 2013

One objective of Computable general equilibrium (CGE) models is the analysis of economy-wide effects of policy measures. The focus of the Factor Markets project is to analyse the functioning of factor markets for agriculture in the EU-27, including the Candidate Countries. While agricultural and food markets are fully integrated in a European single market, subject to an EU-wide common policy, the Common Agricultural Policy (CAP), this is not the case for the agricultural factor markets capital, labour and land. There are partly serious differences with regard to member state regulations and institutions affecting land, labour and capital markets. The presentation of this heterogeneity of factor markets amongst EU Member States have been implemented in the CGE models to improve model-based analyses of the CAP and other policy measures affecting agricultural production. This final report comprises the outcome of a systematic extension and improvement of the Modular Applied GeNeral Equilibrium Tool (MAGNET) model starting from an overview of the current state of the art to represent factor markets in CGE models to a description of work on labour, land and capital in MAGNET

The MAGNET model framework for assessing policy coherence and SDGs: Application to the bioeconomy

This report presents a description of the economic modelling tool MAGNET employed by the Joint Research Centre (JRC) to perform assessments of, among others, the bioeconomy. Additional sector splits of the bio-based sectors as well as the launch of the MAGNET Sustainable Development Goal Insights Module, has further consolidated MAGNET as an attractive option for policy coherence assessments of different scenarios through the evaluation of synergies or trade-offs. To illustrate the flexibility of the model, a detailed medium-term baseline to 2030 is described, replete with numerous economic-, demographic-, biophysical- and policy-drivers.JRC.D.4-Economics of Agricultur

Can the evolution of the European bioeconomy contribute to the Sustainable Development Goals?

Launched and adopted on 13 February 2012, Europe's Bioeconomy Strategy addresses the production of renewable biological resources and their conversion into vital products and bio-energy. The Strategy proposes answers to the challenges Europe and the world are facing, in particular the increasing populations that must be fed, depletion of natural resources, impacts of ever increasing environmental pressures and climate change. In addition, on 25 September 2015, the UN General Assembly formally adopted the universal, integrated and transformative 2030 Agenda for Sustainable Development, along with a set of 17 Sustainable Development Goals and 169 associated targets. The EU has committed to implement the SDGs both in its internal and external policies. A newly developed MAGNET SDG Insights module enables the impact of policy on SDG indicators to be evaluated in an ex-ante framework. The module carries the advantage of translating complex modelling results into the impact on SDG indicators which are fast becoming the common language of global impact assessment. Specifically, the new module includes 60 official and additional indicators, covering 12 of the 17 SDGs for each region of the world. This paper evaluates a range of selected scenarios in terms of the impacts on the SDGs, using the Modular Applied GeNeral Equilibrium Tool (MAGNET), a GTAP-based global economic simulation extended to include second generation biofuels, bioelectricity and waste, biochemicals and a suite of SDG indicators. This approach provides a unique insight into the synergies or trade-offs in scenarios where several market instruments are operating simultaneously and allows for a more coherent approach to policy implementation. The results show the contribution of economic development and policy changes to societal challenges in 2030, both in terms of synergies and trade-off

The distribution of food security impacts of biofuels, a Ghana case study

The demand for biofuels is expected to increase significantly in the coming years. However, there are major concerns on the impact of increased biofuel production on food security. As biofuel affects food security in various ways, it is important to assess the impacts on the four pillars of food security, availability, access, utilisation and stability. The objective of this study is to ex-ante quantify impacts of biofuel production on the four pillars of food security for urban and rural households in a developing country. We illustrate this for Ghana, which proposed a 10% biodiesel and 15% ethanol mandate for 2030 and which faces food security issues. We used the computable general equilibrium (CGE) model MAGNET in combination with a household and a nutrition module to quantify 13 food security indicators. The results show that the largest food security effects of the biofuel mandate are negative impacts on food prices and import dependency. However, the projected food security impacts of the biofuel mandate in 2030 are relatively small compared to the projected food security effects of economic development in Ghana towards 2030. Our approach enables ex-ante quantification of the effects of biofuel on the four pillars of food security and the differentiation of the effects between urban and rural households. Although improvements can be made, the approach means a big step forward compared to the state-of-the-art knowledge on food security impacts of biofuel production and it could contribute to identify options to minimise negative and optimise positive food security effects

Transition support system approach for urban food security in the future : The case of Ghana

The population of the world is becoming increasingly urbanised due to a combination of natural population growth and rural–urban migration. This will pose major challenges to feed the future population and meet the Sustainable Development Goals. Meeting these complex challenges requires an integrated approach. The transition support system (TSS) approach integrates decision support tools and stakeholder analyses for these complex issues. This study has focused attention on the application of decision support tools of the TSS approach that visualises the urgency of future food security as a proof of concept. To this end, the future food security of the city of Accra, the capital of Ghana, has been taken as a case study. The use of Global-Detector and its maps illustrated a quick way to downscale data and projections from MAGNET (Modular Applied GeNeral Equilibrium Tool) and perform spatial analyses without the burden of acquiring additional data. Downscaling of macroeconomic results of future projections provides insights into future urban food security. Giventhese insights, stakeholders might urge policy or interventions. The results of the exercise are largely determined by the availability of data and maps; in particular, the more detailed information is available, the more accurate the results of our exercise will be