Agricultural research spending must increase in light of future uncertainties

Yongyang Cai, Alla Golub and Thomas Hertel

Food Policy, 2017, vol. 70, issue C, 71-83

Abstract: Agricultural productivity depends critically on investments in research and development (R&D), but there is a long lag in this response. Failing to invest today in improvements of agricultural productivity cannot be simply corrected a few decades later if the world finds itself short of food at that point in time. This fundamental irreversibility is particularly problematic in light of uncertain future population, income, and climate change, as portrayed in the IPCC’s Shared Socio-Economic Pathways (SSPs). This paper finds the optimal path of agricultural R&D spending over the 21st century for each SSP, along with valuation of those regrets associated with investment decisions later revealed to be in error. The maximum regret is minimized to find a robust optimal R&D pathway that factors in key uncertainties and the lag in productivity response to R&D. Results indicate that the whole of uncertainty’s impact on R&D is greater than the sum of its individual parts. Uncertainty in future population has the dominant impact on the optimal R&D expenditure path. The robust solution suggests that the optimal R&D spending strategy is very close to the one that will increase agricultural productivity fast enough to feed the World under the most populous scenario. It also suggests that society should accelerate R&D spending up to mid-century, thereafter moderating this growth rate.

Keywords: Agricultural productivity; Lagged response; Research and development; Uncertainty; Min-max regret (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfpoli:v:70:y:2017:i:c:p:71-83

DOI: 10.1016/j.foodpol.2017.06.002

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