Global land investments in the bio‐economy: evidence and policy implications

For countries dependent on agriculture, the recent wave of investor interest in farmland could, in principle, help set in motion a virtuous cycle of economic growth and poverty reduction. A large literature documenting failure of such investments documents the risks involved. To appreciate associated opportunities and challenges, we review past experience, quantify country‐level potential for area expansion versus intensification, and identify determinants of countries’ attractiveness for investors in the initial stages of the “land rush.” The fact that weak land governance seems to increase, rather than reduce, land demand justifies an emphasis on improving institutions, transparency, and accountability while at the same time providing concrete suggestions for policy and research.     

The impacts of biofuels targets on land‐use change and food supply: A global CGE assessment

We analyze the long‐term impacts of large‐scale expansion of biofuels on land‐use change, food supply and prices, and the overall economy in various countries or regions using a multi‐country, multi‐sector global computable general equilibrium model augmented with an explicit land‐use module and detailed biofuel sectors. We find that an expansion of biofuel production to meet the existing or even higher targets in various countries would slightly reduce GDP at the global level but with mixed effects across countries or regions. Significant land re‐allocation would take place with notable decreases in forest and pasture lands in a few countries. The expansion of biofuels would cause a moderate decrease in world food supply and more significant decreases in developing countries like India and Sub‐Saharan Africa. Feedstock commodities (sugar, corn and oil seeds) would experience significant increases in their prices in 2020, but other price changes are small.     

Leveling the field for biofuels: comparing the economic and environmental impacts of biofuel and other export crops in Malawi

Biofuels often raise the specter of food insecurity, water resource depletion, and greenhouse gas emissions from land clearing. These concerns underpin the “sustainability criteria” governing access to European biofuel markets. However, it is unclear if producing biofuels in low‐income countries does exacerbate poverty and food insecurity, and moreover, whether the sustainability criteria should apply to all agricultural exports entering European markets. We develop an integrated modeling framework to simultaneously assess the economic and environmental impacts of producing biofuels in Malawi. We incorporate the effects of land use change on crop water use, and the opportunity costs of using scarce resources for biofuels instead of other crops. We find that biofuel production reduces poverty and food insecurity by raising household incomes. Irrigated outgrower schemes, rather than estate farms, lead to better economic outcomes, fewer emissions, and similar water requirements. Nevertheless, to gain access to European markets, Malawi would need to reduce emissions from ethanol plants. We find that biofuels’ economic and emissions outcomes are generally preferable to tobacco or soybeans. We conclude that the sustainability criteria encourage more sustainable biofuel production in countries like Malawi, but are perhaps overly biased against biofuels since other export crops raise similar concerns about food security and environmental impacts.     

Macro–micro feedback links of water management in South Africa: CGE analyses of selected policy regimes

The pressure on an already stressed water situation in South Africa is predicted to increase significantly under climate change, plans for large industrial expansion, ongoing rapid urbanization, and government programs to provide access to water to millions of previously excluded populations. This article employs a general equilibrium approach to examine the economy‐wide impacts of selected macro and water‐related policy reforms on water use and allocation, rural livelihoods, and economy at large. The analyses reveal that implicit crop‐level water quotas reduce the amount of irrigated land allocated to higher‐value horticultural crops and create higher shadow rents for production of lower‐value water‐intensive field crops, such as sugarcane and fodder. Accordingly, liberalizing local water allocation within irrigation agriculture is found to work in favor of higher‐value crops, and expand agricultural production and exports and farm employment. Allowing for water trade between irrigation and nonagricultural uses fuelled by higher competition for water from urbanization leads to greater water shadow prices for irrigation water with reduced income and employment benefits to rural households and higher gains for nonagricultural households. The analyses show difficult trade‐offs between general economic gains and higher water prices, which place serious questions on subsidizing water supply to irrigated agriculture, i.e., making irrigation subsidies much harder to justify.     

Land‐use change trajectories up to 2050: insights from a global agro‐economic model comparison

Changes in agricultural land use have important implications for environmental services. Previous studies of agricultural land‐use futures have been published indicating large uncertainty due to different model assumptions and methodologies. In this article we present a first comprehensive comparison of global agro‐economic models that have harmonized drivers of population, GDP, and biophysical yields. The comparison allows us to ask two research questions: (1) How much cropland will be used under different socioeconomic and climate change scenarios? (2) How can differences in model results be explained? The comparison includes four partial and six general equilibrium models that differ in how they model land supply and amount of potentially available land. We analyze results of two different socioeconomic scenarios and three climate scenarios (one with constant climate). Most models (7 out of 10) project an increase of cropland of 10–25% by 2050 compared to 2005 (under constant climate), but one model projects a decrease. Pasture land expands in some models, which increase the treat on natural vegetation further. Across all models most of the cropland expansion takes place in South America and sub‐Saharan Africa. In general, the strongest differences in model results are related to differences in the costs of land expansion, the endogenous productivity responses, and the assumptions about potential cropland.     

Impacts of changing water inflow distributions on irrigation and farm income along the Drâa River in Morocco

Irrigation water is essential for agriculture in the arid Drâa River basin in Morocco but climate change leads to increasingly unreliable water supply in the area. This article analyzes impacts of changing water inflow distributions on irrigation and farm income extending a conjunctive river basin model toward a stochastic modeling approach. Regional climate scenarios are used to derive a maximum likelihood density estimate of current and future water supplies. Based on these distributions, Monte Carlo simulations are performed to obtain stochastic model results on surface and groundwater irrigation as well as economic indicators for six oases along the river. The probability of farmers to receive revenues below the subsistence level is around 2% under current conditions, but this is likely to rise to rates of 6% to 15% depending on the underlying climate change scenario. The composition of water sources for irrigation will shift to more groundwater use. The river basin model is able to represent complex spatial interactions between oases as well as a partial complementarity between groundwater and surface water irrigation due to salinity management effects. Interestingly, the value of groundwater is not necessarily increasing under future climatic conditions as salinity problems are aggravated with expanded groundwater use.     

The future of food demand: understanding differences in global economic models

Understanding the capacity of agricultural systems to feed the world population under climate change requires projecting future food demand. This article reviews demand modeling approaches from 10 global economic models participating in the Agricultural Model Intercomparison and Improvement Project (AgMIP). We compare food demand projections in 2050 for various regions and agricultural products under harmonized scenarios of socioeconomic development, climate change, and bioenergy expansion. In the reference scenario (SSP2), food demand increases by 59–98% between 2005 and 2050, slightly higher than the most recent FAO projection of 54% from 2005/2007. The range of results is large, in particular for animal calories (between 61% and 144%), caused by differences in demand systems specifications, and in income and price elasticities. The results are more sensitive to socioeconomic assumptions than to climate change or bioenergy scenarios. When considering a world with higher population and lower economic growth (SSP3), consumption per capita drops on average by 9% for crops and 18% for livestock. The maximum effect of climate change on calorie availability is ?6% at the global level, and the effect of biofuel production on calorie availability is even smaller.     

Food security,the labor market,and poverty in the Brazilian bio‐economy

This article deals with the social implications of ethanol expansion in Brazil. The evolution of the labor market in sugarcane production in the country is analyzed together with its regional patterns of expansion, to illustrate how changes in the recent expansion are modifying the traditional pattern of labor demand in the activity. At the same time, the distributional effects of sugarcane expansion, as well as it's impacts on food security and land use change was approached with the aid of general equilibrium simulation models. The analysis shows that both the average earnings and the average years of schooling in sugarcane production are actually higher than in general agriculture in Brazil, and that this is linked to the growing increase in production in the Southeast and Central‐West. Sugarcane production in these regions is more capital intensive and has a much higher productivity than in other traditional regions in Northeast Brazil. The study concludes that the expansion in sugarcane production according to actual patterns does not have a negative effect on poverty, and has only minor impacts on food prices and deforestation. The increase in the regional economic imbalances within the country appears to be the problem that requires attention.     

Targeting,bias, and expected impact of complex innovations on developing‐country agriculture: evidence from Malawi

Agronomic analyses of new technologies are often conducted under carefully controlled research station programs or trials managed by self‐selected farmers. Oftentimes, the technologies are then scaled up with minimal evaluation under real‐world conditions. Yet, the interim step between agronomic trials and large‐scale promotion is crucial to generate evidence on the social and economic impact of technologies that is both internally valid and generalizable. The article focuses on a participatory action research program in Malawi designed to test and identify scalable technology options to intensify the smallholder sector and contribute to poverty reduction and food and nutrition security. We examine the socioeconomic characteristics of farmers testing technologies and find evidence of systematic targeting of better‐endowed farmers. After controlling for observable differences using matching and a doubly robust estimator, we find evidence of early positive effects on maize yield and harvest value, although placebo tests suggest possible selection on unobservables. We note that attention should be given to program design and household characterization to better define and improve targeting criteria, technology selection, and external validity.     

Technology adoption under seed access constraints and the economic impacts of improved pigeonpea varieties in Tanzania

Dry‐land legumes, well adapted to drought‐prone areas, have largely been neglected in the past despite the good opportunities they offer for income growth and food (and nutritional) security for the poor. This study evaluated the adoption and impact of two farmer and market‐preferred and disease‐resistant pigeonpea varieties that were developed and promoted in semi‐arid Tanzania. The new varieties were resistant to fusarium wilt, a fungal disease devastating the crop. However, farmers wanting to adopt new varieties did not adopt due to seed access constraints and under‐developed seed delivery systems. Adoption of new varieties is therefore analyzed using an augmented double hurdle model that allows estimating variety adoption conditional on seed access thresholds accounting for the additional information on sample separation. The study identifies the crucial role of seed access (local supply), extension, education, participatory decision making, capital, and household assets in determining adoption. The social economic benefits of the technology and policies for improved seed access were further analyzed using the extended economic surplus method (DREAM model). Even under restrictive assumptions, overall discounted benefits were found to be quite attractive, indicating the need for additional efforts to scale‐up the success story. Analysis of changes in research benefits from relaxing the seed access constraint showed that net gains would increase by up to 30% if farmer access to improved seeds can be assured. Smallholder farmers are the major beneficiaries along with consumers and rural net‐buyers who gain from productivity‐induced lower market prices.     

The fourth industrial revolution,agricultural and rural innovation,and implications for public policy and investments: a case of India

The Indian Government and public–private partnerships are developing and disseminating a dizzying number of innovative, networked solutions, broadly known as the Digital India initiative, to increase the efficiency of safety nets and worker productivity and to improve life. Yet, challenges to turn the power of information and other technologies into a farmer‐friendly technological revolution for India's 156 million rural households are considerable, including: (1) reliable, up‐to‐date, location‐specific message content for a diverse agriculture to help stratified households shift to productive, knowledge‐intensive agriculture as a business—government, private sector, and civil society have big roles to play; (2) digital literacy, i.e., teaching farmers how to choose and use apps, even where the digital divide is absent; apps are, or soon to be, in regional languages; and (3) monitoring actual use and impacts on users’ lives by understanding the adoption and adaptation processes. These challenges call for bottom‐up, complementary investments in physical, human, and institutional capital, and farmer‐friendly e‐platforms, while forging ahead with many top‐down policy and institutional reforms currently underway, in which progress is real and constraints holding back greater success are better understood.     

China’s Agricultural Policy Transition: Impacts of Recent Reforms and Future Scenarios

This article reviews recent developments in China’s agricultural domestic support policy, especially the transition from taxing farmers and agriculture to providing direct subsidies to grain production and purchased inputs. A model‐based quantitative analysis on the effects of these policy changes is presented. Simulation results suggest that recent policy changes have achieved the declared policy goals of increasing grain production and boosting farm income. Much of the increase in grain production and farm income can be attributed to higher per unit return to arable land, land reallocation to grain production and extra agricultural employment triggered by the policy changes. Based on the assumption that China’s public assistance to agriculture and farmers will continue and rise, two hypothetical future scenarios are simulated. Using all the support permitted under WTO de minimis limits with existing instruments, China’s policy will increase grain production, change trade patterns seemingly contrary to China’s comparative advantage, increase rural employment and significantly increase farm income (by more than 12%). If, however, decoupled instruments are applied to raise China’s agricultural domestic support to the same level, China’s agricultural production and trade will remain unchanged, rural employment remain stable, but farm income will be increased by nearly 15%.     

Organic certification,export market access and the impacts of policy: Bayesian estimation of avocado smallholder “times‐to‐organic certification” in Michoacán Mexico

This study analyzes organic adoption decisions using a rich set of time‐to‐organic durations collected from avocado small‐holders in Michoacán Mexico. We derive robust, intrasample predictions about the profiles of entry and exit within the conventional‐versus‐organic complex and we explore the sensitivity of these predictions to choice of functional form. The dynamic nature of the sample allows us to make retrospective predictions and we establish, precisely, the profile of organic entry had the respondents been availed optimal amounts of adoption‐restraining resources. A fundamental problem in the dynamic adoption literature, hitherto unrecognized, is discussed and consequent extensions are suggested.