UNEBS/AARES NE Branch Seminar Invitation on Friday 10th April at 12:30PM LT5

Professor Oscar Cacho

UNE Business School

Seminar Title:  Designing Effective Policies for Climate-Smart Agriculture by Combining Evidence and Modelling

Abstract

Climate-Smart Agriculture (CSA) is based on the principle that achieving food security and responding to the challenges of climate change are two goals that must be achieved together. The concept was first introduced by FAO (the Food and Agriculture Organization of the United Nations) as an approach to developing the technical, policy and investment conditions to achieve sustainable agricultural development for food security under climate change. Interest in CSA has been growing to the extent that the Global Alliance for Climate-Smart Agriculture was launched on 23 September 2014 at the UN Climate Summit in New York.

An essential feature of CSA is its reliance on a solid evidence base. This involves combining household-level data with climatic, environmental, agricultural, demographic, institutional and economic data, while accounting for spatial heterogeneity. Econometric analysis of the evidence base provides useful insights into policies to enhance development and adoption of desirable practices. Econometric model parameters provide estimates of the marginal response of CSA outcomes to alternative policies. These parameters can be used to calibrate stochastic simulation models for policy analysis. In this seminar, probit models of adoption and disadoption of CSA technologies are used to derive transition probability matrices for a Markov model of long-term adoption that accounts for spatial heterogeneity. Potential uses of the model in policy analysis are explained.

This type of analysis can only be done ex-post for policies that are included in the dataset and for which enough variation has occurred to provide reliable regression coefficients. In contrast, ex-ante analysis of proposed policies can be undertaken using mathematical programming models of farm households. These farm models explicitly consider technical relationships between inputs and outputs as well as taking into account the constraints faced by various types of households. The range of policies and technologies that can be explored is expanded by allowing the analyst to predict how farm households would react to changes in yields, prices and in the constraints they face, all of which can be influenced through policy. A critical question is how to calibrate the farm-level models to be consistent with the observed behaviour of different types of farmers operating in a heterogeneous environment. Ideas will be presented for the development and calibration of these models and their application in policy analysis.

The work reported in this seminar was undertaken by Professor Oscar Cacho during a 6-month period working with the EPIC (Economics and Policy Innovations for Climate-Smart Agriculture) team at FAO in Rome. It is part of a continuing collaboration working on producing several useful outputs.

Oscar Cacho is professor of agricultural and resource economics at UNE. He started his professional life as a marine biologist and later became an agricultural economist. His research interests centre on the application of bioeconomics to interesting problems in agriculture and natural resources. His recent work has been in two major areas: the economics of biosecurity to protect native ecosystems, and climate-change economics and policy with focus on land use change and forestry in tropical countries. He is a regular consultant to the Food and Agricultural Organisation of the UN (FAO) on this topic.