Wolfgang Britz

Positive Mathematical Programming Approaches - Recent Developments in Literature and Applied Modelling

This paper reviews and discusses the more recent literature and application of Positive Mathematical Programming in the context of agricultural supply models. Specifically, advances in the empirical foundation of parameter specifications as well as the economic rationalisation of PMP models – both criticized in earlier reviews – are investigated. Moreover, the paper provides an overview on a larger set of models with regular/repeated policy application that apply variants of PMP. Results show that most applications today avoid arbitrary parameter specifications and rely on exogenous information on supply responses to calibrate model parameters. However, only few approaches use multiple observations to estimate parameters, which is likely due to the still considerable technical challenges associated with it. Equally, we found only limited reflection on the behavioral or technological assumptions that could rationalise the PMP model structure while still keeping the model’s advantages.

Farm Type Effects of an EU‐wide Direct Payment Harmonisation

In this study, we analyse how three scenarios involving different levels of harmonisation of common agricultural policy (CAP) decoupled payments in the EU affect the distribution of farm income across regions and farm types. We use the farm type extension of the common agricultural policy impact (CAPRI) model, which captures farm heterogeneity across the EU. The first scenario (NUTS1) assumes uniform per-hectare payments at the NUTS1 level. The second scenario (MS-CONV) equalises the per-hectare rates inside each Member State (MS) and partially harmonises the single payment scheme (SPS) across MS in line with the 2011 Commission proposal. The third scenario simulates a uniform per-hectare payment at the EU level. Depending on the implementation of the SPS, the NUTS1 flat rate induces a substantial redistribution of payments across farm types and NUTS2 regions, particularly in regions that apply the historical SPS. The MS-CONV and EU flat-rate schemes have more significant impacts at the EU-wide level. In the EU-15, almost all farms lose payments from MS-CONV and EU-wide flat rates, whereas in the EU-10, almost all farm types gain from these scenarios. Our conservative estimates indicate that the flat-rate payments could redistribute up to €8.5 billion. Lower land rental costs partially offset the losses of farm income in the EU-15 from payment redistribution. Land rents drop for all flat-rate scenarios across most sectors and farm sizes in the EU-15. In the less productive new MS, the landowners’ rental income is largely unaffected by the introduction of the flat rate.

Modelling regional input markets with numerous processing plants: The case of green maize for biogas production in Germany

The location of first generation processing plants for biogas using bulky inputs is a prominent example of locational decisions of plants that face high per unit transport costs of feedstock and simultaneously depend to a large extent on feedstock availability. Modelling the resulting regional feedstock markets then requires a spatially explicit representation of demand. With production capacities of plants small in comparison to market size, large numbers of possible type-location combinations need to be considered, requiring considerable computation time under existing integer programming-based approaches. Therefore, in this paper we aim to present an alternative, faster and more flexible iterative solution approach to simulate location decisions for processing plants. And with greater flexibility, this approach is able to take into account spatially heterogeneous transport costs depending on total demand. The approach is implemented in a modelling framework for biogas production from green maize in Germany, which currently accounts for ca. five per cent of Germanys agricultural area. By modifying green maize prices, demand functions are derived and intersected with regional supply functions from an agricultural model to simulate market clearing prices and quantities. The application illustrates that our approach efficiently simulates markets characterised by small-scale demand units and high, spatially heterogeneous transport costs.

A comparison of CAPRI and SEAMLESS-IF as Integrated Modelling Systems

SEAMLESS-IF and CAPRI are both integrated agricultural modelling systems for policy impact assessment at EU level, linking model components across scales and between the economic and bio-physical domains. However, the overall design, focus and representation of agricultural sub-systems vary between them. This chapter describes and compares the main characteristics of SEAMLESS-IF and CAPRI, looking at objectives, concepts for database and model linking, modelling approaches at farm level and technology representation, agri-environmental indicators and baseline construction for forward looking impact assessment. Observed differences in these areas follow from SEAMLESS-IF focusing on field and farm level components stressing bio-economic interrelations and technological innovation, whereas CAPRI adopts a more market oriented perspective with full coverage of EU policies. Software design in SEAMLESS-IF is shaped by flexible component integration and a strong client oriented graphical user interface. CAPRI instead stresses simulation performance and exploitation of results by modellers.

Symmetric Positive Equilibrium Problem: A Framework for Rationalizing Economic Behavior with Limited Information: Comment

In a recent contribution to this journal, Paris suggests a framework which extends positive mathematical programming (PMP)—a widely used calibration methodology for agricultural supply models—to a symmetric positive equilibrium problem (SPEP). He stresses three main contributions: (1) The PMP methodology is modified to incorporate more than one observation on production programs; (2) A solution to the “self-selection problem” with respect to the choice of crops produced by each farm is provided; (3) “Limiting inputs” are no longer considered fixed quantities as in PMP. We address several conceptual concerns with respect to the SPEP methodology and the presented application. We consider these to be substantial enough to question Paris’ claim to present “ ... a general framework of analysis that is capable of reproducing economic behavior in a consistent way ... ” (p. 1049). Our discussion is structured along Paris’ presentation: The next three sections represent the core of the comment and deal with the methodology itself. They refer to the three phases of SPEP: (i) recovery of unknown variable marginal costs and shadow prices of limited resources, (ii) use of these results to specify data constraints and parameter supports for generalized maximum entropy (GME) estimation of a cost function, and (iii) definition of a simulation model. Finally, concluding remarks are made regarding the application of SPEP to an analysis of the EU Common Agricultural Policy (CAP) based on Italian farm data. Throughout the comment we use the same

Tools for integrated assessment in agriculture. State of the art and challenges.

The increased interest in Integrated Assessment (IA) of agricultural systems reflects the growing complexity of policy objectives and corresponding impacts related to this sector. The paper contemplates on the status of quantitative tools for IA in agriculture, drawing on recent European experiences from the development and application of large-scale integrated modelling systems which are both multi-dimensional/disciplinary and covering multiple spatial scales. Specific challenges arise from the numerous roles of agriculture with societal relevance, the heterogeneity of farms and farming systems across a geographical region and the multitude of environmental impacts of interest associated with agricultural production. Conceptual differences between typical bio-physical and economic models as well as deficiencies regarding validation and uncertainty analysis require continued efforts to improve the tools.

Assessment of the Impact of Avian Influenza–related Regulatory Policies on Poultry Meat Trade and Welfare

We use two methodological approaches to analyze avian influenza related quarantine measures. First, a Heckman type gravity model is used to estimate the trade impact and second, a spatial partial equilibrium simulation model is developed to simulate welfare changes. The simulation model considers spread and transmission risk according to the disease status of the importing country as well as parameter uncertainty of the calibrated coefficients by using a Monte Carlo approach. The econometric results show that the principle of regionalization is preferred to import trade bans for uncooked meat. The simulation results verify the negative welfare impact of currently implemented regulatory policies and indicate that significant trade diversion effects according to the disease status of countries occur. The welfare results confirm that a trade ban is not the most appropriate measure to address the infection risk resulting from the spread of the avian influenza virus.

Farm level policy scenario analysis

This study presents a quantitative policy impact analysis of alternative policy and macroeconomic assumptions in the agricultural farming sector. Three scenarios are considered: direct payment scenario, macroeconomic environment scenario and WTO scenario. We apply the CAPRI-Farm model, an extension of CAPRI which disaggregates the standard Nuts2 regional resolution of the supply models in CAPRI further to farm type models, capturing farm heterogeneity in terms of farm specialization and farm size across all EU regions and MS. The advantage of the CAPRI-Farm model compared to other similar models is that it represents comprehensively all major farm types in the EU and it links farm level behaviour with output and input market price responses

Agri-Environmental Nitrogen Indicators for EU27

Nitrogen is a key element to ensure modern agriculture’s output, sustaining global food, feed, fibre and now bio-energy production. But it also accounts also for, or at least contributes to, key environmental problems that challenge the well functioning of today’s societies (Sutton et al. 2011). One molecule of nitrogen can contribute to one or many environmental problems, including eutrophication, groundwater pollution via leaching and run-off of nitrates and organic nitrogen, climate change via N2O emissions, acidification via ammonia emissions and may affect human health via ozone formation or biodiversity via nitrogen deposition on natural areas. This multiple impact of nitrogen is often referred to as the “nitrogen cascade” (Galloway et al. 2003).

Ökonomische Bewertung des Erneuerbare Energien Gesetzes zur Förderung von Biogas

Abstract The Renewable-Energy-Source-Act (EEG) promotes German biogas production in order to substitute fossil fuels, protect the environment and prevent climate change. In this paper we quantitatively analyse the EEG-reform in 2008. Results imply that the reform contributes to an expansion of biogas electricity generation and thus to substitution of fossil fuels. However, subsidies, land and transport emissions per unit of electricity produced increase. An alternative analysis shows that an EEG with tariffs independent from plant-types would provide the highest subsidy-efficiency, lower land requirements and higher transport emissions compared to EEG before its reformation.