© European Communities, 2007 Background Background • Economic models are indispensable instruments to support policy-making by DG AGRI. • Key topics for DG AGRI: reform of the Common Agriculture Policy (CAP), markets (food prices, biofuels), trade policy negotiations (bilateral, WTO), rural development. • DG AGRI (customer) requests and co-finances support with model analysis by IPTS. • Advantages of IPTS Modelling Platform: cluster of excellence, synergy across models, EC internal (work partly sensitive). • IPTS provides ad-hoc model results, in-depth studies, policy recommendations. Support to Agricultural Policy Making with Economic Modelling Tools Contact Dr. Robert M’barek and Dr. Ignacio Perez Dominguez European Commission • Joint Research Centre Institute for Prospective Technological Studies Tel. +34 954488489 • Fax +34 954488434 E-mail: Robert.M’[email protected] [email protected] Agricult ure Rest of Economy region world world AGLINK AGMEMOD CAPSIM ESIM CAPRI GLOBE GTAP World markets WTO EU27 markets CAP reform Farm income & structure Trade Investment Factor markets DG RTD: FP6 & FP7 Academia Customer DG AGRI Farm/ Household Fig. 1: Agro-Economic Modelling Platform at IPTS Current state of Modelling Platform Current state of Modelling Platform • Seven highly complex modelling tools established (Fig. 1): Agricultural Sector Models: CAPRI, AGMEMOD, CAPSIM, AGLINK, ESIM General Equilibrium Models: GLOBE, GTAP • Different policy issues covered: reform of CAP, world markets, rural development • Modelling on different regional scales (countries, NUTS-2 regions) • Excellent links to academic modelling community Customer support (DG AGRI) by means of the Customer support (DG AGRI) by means of the Agro-Economic Modelling Platform Agro-Economic Modelling Platform (1) Processing of the request • IPTS translation of the policy-makers’ request into applicable research questions and preparation of internal project planning • Scenario construction and decision on assumptions on macro-economic factors in collaboration with the customer (2) Selection of tools • Close collaboration with the customer and research institutions (original developers of the models) is crucial. • Out of the available tools in the Modelling Platform the appropriate ones are selected. (3) Output / Dissemination • Analysis and interpretation of results in the broad context of the policy and interactions with the overall economy. • Reports for policy makers (policy briefings), technical reports, scientific publications (peer reviewed journals), contribution to EC publications. Source: European Commission (2007) Rural Development in the European Union - Statistical and Economic Information - Report 2007 Example for customer support Example for customer support • DG AGRI requests an outlook of agricultural markets and rural development indicators in a medium-term baseline (2013). • IPTS selects the appropriate modelling tools: to perform agricultural market prospects ESIM and AGLINK, to break down the results on regional level and incorporate environmental and labour indicators CAPRI. • As an illustration of results for the outlook on agricultural markets, Fig. 2 shows a map on income changes derived from CAPRI: EU-27 agricultural income would grow by 23.2 % between 2005 and 2013 in real terms and per labour unit. However, this overall gain would mask marked differences between EU-15, EU-10 and EU-2 as well as between individual regions. Moderate development of agricultural income in the EU15 (+ 9.3 %) over the period 2005-2013. In the EU12 more pronounced picture (+ 37.1 %). • In Fig. 3 a map of an environmental indicator (nitrogene balance) resulting from CAPRI is provided: In vast majority of the regions change in surplus is rather small (between 0 and +4 kg/ha). Projected surplus in parts of the Netherlands, Belgium, Germany, Brittany or the Po valley is still at rather high levels. Fig. 3: Projected change in gross Nitrogene balance (kg N/ha) in % from 2002 to 2013 • Contribution to EC publications: European Commission (2007): Prospects for agricultural Markets and Income in the EU 2006-2013 Chapter contribution to European Commission (2007) Rural Development in the European Union - Statistical and Economic Information - Report 2007 Agriculture Income = Revenues minus Costs plus Premiums (i.e. income available to farmers to pay for land, labour and capital, plus profits) Source: CAPRI Modelling System, Baseline Update December 2006) -20 -10 5 20 30 51 Fig. 2: Medium term change in regional value added per hectare as compared to the EU-27 average (%)