Q. How does ERS estimate the potential agriculture effects
of global changes in climate and other atmospheric conditions?
A. The Economic Research Service uses
the Future Agricultural Resources Model (FARM) to estimate
the agricultural effects of global changes in climate
and other atmospheric conditions. Projections
of climate change are provided by global meteorological
models run by organizations such as the Goddard
Institute for Space Studies and NOAA's
Geophysical Fluid Dynamics Laboratory. Projections
of direct CO2-induced increases in yields
are interpolated from data provided in Rosenzweig et al.
(1993). FARM is composed of an analogous region model
and a structural economic model (see Darwin et al., 1994,
1995, 1996; and Darwin, 1999, for details). Analogous
region models, which rely on the concept that similar
climates mean similar production practices, implicitly
capture changes in crop or livestock outputs, production
inputs, or management practices that farmers are likely
to adopt under new climatic conditions.
FARM's analogous region model uses a geographical information
system with a spatial  resolution
of 0.5° latitude and longitude to link climate variables
with 6 land classes in 12
production regions. The land classes are defined by
length of growing season. Each land class within a region
is associated with a unique set of crop, livestock, and
forestry products. A change in climate, therefore, alters
the distribution of land classes within the regions, which
in turn modifies the regions' potential for agricultural
and forestry production.
Structural economic models—which rely on the concept that
landowners, farmers, households, and other economic agents maximize
profit and utility—capture economic adaptations (i.e., changes
in cultivated land, international trade, or consumption) that economic
agents, both domestic and foreign, might make in response to climate-induced
changes in world agricultural productivity. FARM's structural economic
model is a global computable general equilibrium (CGE) model. It
accounts for all expenditure flows from households through domestic
and international markets to producing sectors and then accounts
for all income flows back to households, which are assumed to own
all primary factors of production (i.e., land, labor, capital).
 FARM's
CGE model provides comprehensive measures of economic
activity associated with 13 aggregate commodities (wheat,
other grains, nongrains, livestock, forest products, coal-oil-gas,
other minerals, fish-meat-milk, other processed foods,
textiles-clothing-footwear, other nonmetallic manufactures,
other manufactures, and services) in 8 regions (the green-
and gray-colored areas in the FARM
regions map form one economic region in FARM's CGE
model). Model outputs include changes in land use, commodity
prices and quantities, and real income and expenditures.
Climate-induced alterations of the distribution of land
within the regions, therefore, end up affecting the economic
well-being of producers and consumers around the world.
References
- Darwin, R.F. 1999. "A FARMer's View of the Ricardian Approach
to Measuring Effects of Climatic Change on Agriculture," Climatic
Change 41(3-4):371-411.
- Darwin, R.F., J. Lewandrowski, B. McDonald, and M. Tsigas. 1994.
"Global Climate Change: Analyzing Environmental Issues and Agricultural
Trade within a Global Context," in Sullivan, J. (ed.) Environmental
Policies: Implications for Agricultural Trade. FAER-252, U.S.
Dept. Agr., Econ. Res. Serv., Washington, DC.
- Darwin, R.F., M. Tsigas, J. Lewandrowski, and A. Raneses. 1996.
"Land Use and Cover in Ecological Economics," Ecological Economics
17(3):157-181.
- Darwin, R. F., M. Tsigas, J. Lewandrowski, and A. Raneses. 1995.
World Agriculture
and Climate Change: Economic Adaptation. AER-703, U.S.
Dept. Agr., Econ. Res. Serv., Washington, DC.
- Rosenzweig, C., M. Parry, K. Frohberg, and G. Fisher. 1993.
Climate Change and World Food Supply. Research Report No.
3. University of Oxford, Environmental Change Unit, Oxford, England.
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