The main tool kit for our project: Jordmod – a partial equilibrium model of Norwegian agriculture

1. The main tool kit for our project:Jordmod – a partial equilibrium model of Norwegian agriculture Ivar Gaasland (SNF)

2. Outline • General characteristics of Jordmod • Adaptation at the farm level – Model Farm illustration • Adaptation at the sector level – Climate policy scenario • Improvement of model – on-going work • Use of model - potential

3. General characteristics • Model class • Partial equilibrium model (small sector assumptions) • Small country assumption • Comparative static model • Long run perspective • Domestic and foreign products perfect substitutes

4. General characteristics north Price S south-west PW D Milk production

5. General characteristics • Optimization model Max: producers’ + importers’ + consumers’ surplus subject to: 1) available land 2) regulations 3) policy targets • Policy analysis • optimal policy subject to policy targets • exogenous policy instruments, like: • Subsidies of various kinds • Import tariffs and quotas • Emission taxes or quotas

6. General characteristics • 32 production regions (e.g., western Norway) • 11 model farm types (e.g., combined milk and beef) • 15 products (e.g., milk and beef) • 8 intermediaries (e.g., grass fodder) • 4 land qualities • arable land, food grain • arable land, other • surface tilled land • infield pasture • 32 regions

7. Example model farm -milk and beef production Western Norway • Separate supply module that constructs model farms for given relative prices, technology, and natural restrictions • 36 activities to choose among • Most inputs are proportional to the number of animals and land units, but endogenous: • Plant yield per land unit = f(nitrogen) • Milk production per cow = g(fodder) • Functions and coefficients for GHG emission have been attached to activities and production factors • IPCC methodology, adapted to Norwegian conditions and practices)

8. Milk and beef production Western Norway – current policy

9. Milk and beef production Western Norway – current policy

10. Milk and beef production Western Norway – carbon tax

11. Milk and beef production Western Norway – carbon tax

12. Adaptation at the sector level –climate policy analysis GHG emission target: • 30 percent reduction in GHG emission compared to base solution Policy assumptions: • Current policy as a point of departure • Market access and export subsidy commitment as in the Doha proposal • Carbon tax: NOK 300 per ton GHG emissions • Production and land use as high as possible subject to these requirements

13. Climate policy analysis

14. Climate policy analysis • Abatement costs is negative in agriculture if no value is attributed to agricultural activity beyond the world market price of food

15. Improvements of model -on-going work • Data • Regional differences in emission or sequestrationwith respect to land use (e.g., till/no-till; forest) at different land types (e.g., cultivated wetland; mineral soil) • Nationally adapted emission coefficients • Technologies • Restoration of wetland, forest, biogas, bio-char • Model aspects • Dynamic aspects handled in a comparative static model • “Permanence”

16. Use of model –potential • Cost-benefit analysis of different ways to reduce GHG emissions from agriculture • Trade-offs between policy objectives, e.g., emission cut vs.: • production targets • land amenities values • What if carbon sequestration on agricultural land is credited?