Modeling land physically in CGE models: new insights on intensive and extensive margins

Xin Zhao, Dominique van der Mensbrugghe and Wally Tyner

No 332816, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project

Abstract: The constant elasticity of transformation (CET) functional form has been widely used in CGE models for handling land heterogeneity. However, the CET approach cannot provide traceable land use change results since land productivity changes due to land transformation are implicitly adjusted by shifting effective land supply so that results are “effective land” rather than physical land. In this study, we proposed a framework in which land transformation is physically modeled using the additive CET (ACET) approach while land productivity changes due to transformation are adjusted from land demand in production. We decomposed land productivity changes technical shifters using ACET. We demonstrated that implementing a same land productivity change technical shifter from either land supply side or land demand side are equivalent in non-land market equilibrium. For the purpose of this study, we build a simple CGE model and design experiments to comparing CET with ACET and to testing the sensitivity of two new margin responses including land productivity response due to transformation and the multiple cropping and unused land response. We demonstrated that the ACET approach plus the land productivity adjustments provide a promising alternative to the CET approach in modeling land supply in CGE model, despite that more careful studies are necessary for calibrating parameters for important responses.

Keywords: Land Economics/Use; Research Methods/Statistical Methods (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://ageconsearch.umn.edu/record/332816/files/8788.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:pugtwp:332816

Access Statistics for this paper

More papers in Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().