Improving the Way Land Use Change is Handled in Economic Models

Xin Zhao, Dominique van der Mensbrugghe (), Roman M. Keeney and Wallace Tyner

Chapter 15 in Policy Analysis and Modeling of the Global Economy:A Festschrift Celebrating Thomas Hertel, 2021, pp 467-515 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Sound economic modeling of land use in global economic models is critical for evaluating agricultural, biofuel, and climate policies. Current approaches do not preserve physical land area, do not account for the fact that land is of different qualities, or do not explicitly include the cost of converting land from one use to another. This chapter proposes a land use modeling framework building on the additive form of the constant elasticity of transformation (ACET) approach. We demonstrated that the framework could (1) directly provide traceable physical land use results, (2) flexibly handle land productivity differences based on biophysical information, (3) explicitly introduce land conversion cost, and (4) provide welfare decomposition in light of land heterogeneity and conversion cost. An experiment of mandating a 10% increase in grain consumption in the US food sector showed that ignoring land heterogeneity and conversion cost would underestimate the welfare loss by 28%.

Keywords: Computable General Equilibrium Modeling; CGE Models; Trade Policy Modeling; GTAP; Global Trade Analysis Project; Trade Impact Assessments; Sustainability Impact Assessments; Trade and Employment; Trade and Climate; Globalization; Preferential Trade Agreements; Thomas Hertel (search for similar items in EconPapers)
JEL-codes: C68 F13 F18 Q54 Q56 (search for similar items in EconPapers)
Date: 2021
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Related works:
Journal Article: Improving the way land use change is handled in economic models (2020)
Working Paper: Improving the Way Land Use Change is Handled in Economic Models (2019)
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