ECONOMIC INCENTIVES TO ACHIEVE CLIMATE-FRIENDLY AGRICULTURAL PRODUCTION SYSTEMS

• Sponsoring Institution: National Institute of Food and Agriculture
• Project Status: TERMINATED
• Funding Source: HATCH
• Reporting Frequency: Annual
• Accession No.: 1010333
• Project No.: PEN04611
• Project Start Date: Oct 1, 2016
• Project End Date: Sep 30, 2021

Project Director
Abler, DA, GE.

Recipient Organization
PENNSYLVANIA STATE UNIVERSITY
208 MUELLER LABORATORY
UNIVERSITY PARK,PA 16802

Performing Department
Agri Economics, Sociology & Education

Non Technical Summary
It is estimated that the world's food and agricultural system is responsible for up to one third of total greenhouse gas emissions. This includes emissions generated in the production of agricultural inputs (e.g., fertilizer), agricultural production, food processing, transportation and the delivery of food to consumers. It also includes emissions generated by land use change - the conversion of land for use in agriculture. While a substantial amount of research is being conducted on the technical issues involved in greenhouse gas mitigation and adaptation to climate change in agriculture, less effort has been directed to the analysis of how changes in economic incentives can be used to achieve mitigation and adaptation targets. This project will contribute to enhancing knowledge in that area.

Animal Health Component

0%

Research Effort Categories

Basic

0%

Applied

100%

Developmental

0%

Classification

Knowledge Area (KA)	Subject of Investigation (SOI)	Field of Science (FOS)	Percent
132	0430	3010	30%
601	0430	3010	40%
605	0430	3010	30%

Knowledge Area
601 - Economics of Agricultural Production and Farm Management; 605 - Natural Resource and Environmental Economics; 132 - Weather and Climate;

Subject Of Investigation
0430 - Climate;

Field Of Science
3010 - Economics;

Keywords

climate change

adaptation

mitigation

economic incentives

agriculture

food

Goals / Objectives
1. To develop new sectoral models for food agriculture, and modify and apply existing sectoral models, to examine the impacts of alternative policy instruments (market-based and regulatory) for generating climate-friendly production systems. 2. To develop and apply micro-models of farm-level decision making to examine the adoption of climate-friendly production methods.

Project Methods
A number of sectoral models have been developed to examine a range of agricultural policy issues at the national and international levels. Partial equilibrium models (e.g., PEATSim; LTEM) and general equilibrium models can be used to examine the effects of GHG-related taxes and subsidies on domestic agricultural production and consumption and on international trade. Since some types of taxes, e.g., carbon taxes, can be applied at the economy-wide level (explicitly through carbon pricing or implicitly through cap-and-trade or regulation) data on carbon prices will be obtained from researchers involved in existing global modeling efforts that are addressing the effects of the Paris agreement (e.g., Global Trade Analysis Project (GTAP) website). Optimization models can be used to determine the impact of carbon taxes, changes in subsidies and other taxes, and the use of regulations on mitigation. One advantage of such models is that they can be used to evaluate the adoption of modified production practices (e.g., use of minimal tillage for crops or modified feed rations for livestock) on agricultural production, input usage, and profitability.A number of sectoral models have been developed to examine a range of agricultural policy issues at the national and international levels. Partial equilibrium models (e.g., PEATSim; LTEM) and general equilibrium models can be used to examine the effects of GHG-related taxes and subsidies on domestic agricultural production and consumption and on international trade. Since some types of taxes, e.g., carbon taxes, can be applied at the economy-wide level (explicitly through carbon pricing or implicitly through cap-and-trade or regulation) data on carbon prices will be obtained from researchers involved in existing global modeling efforts that are addressing the effects of the Paris agreement (e.g., Global Trade Analysis Project (GTAP) website).Optimization models can be used to determine the impact of carbon taxes, changes in subsidies and other taxes, and the use of regulations on mitigation. One advantage of such models is that they can be used to evaluate the adoption of modified production practices (e.g., use of minimal tillage for crops or modified feed rations for livestock) on emissions. This is difficult in sectoral partial equilibrium models. Changes in the choice set facing producers due to change in land use practices and production technology can also be introduced into optimization models to examine the effects on emissions.In order to achieve objective 1, personnel involved in this project will collaborate with colleagues at other research institutions (nationally and internationally) in the development of new multicounty partial equilibrium and optimization models, and the modification and application of existing multicounty partial equilibrium and optimization models, to assess policy options for GHG mitigation in agriculture in the light of commitments under the 2015 UNFCCC climate change agreement. This will involve the transformation of proposed national commitments (Intended Nationally Determined Contributions - INDCs) notified to the UNFCCC into policy parameter settings and the evaluation of the impact of these settings on national production, consumption, international trade and prices of agricultural commodities. This part of the project will contribute to an assessment of the extent to which it is possible to achieve a carbon-efficient global reallocation of production and consumption in agriculture in line with the Paris Agreement.Much of the work on farm-level decision making in the context of environmental policy has focused on the use of principal-agent models to examine the design of agri-environmental programs. In these models the principal (government) offers incentives to agents (farmers) to supply environmental services. A major focus in these models has been the implications of information asymmetry for adverse selection and moral hazard. Adverse selection results from the fact that farmers usually have better information than the government on the costs of supplying environmental services. Consequently, they may be able to increase the amount of payment that they can extract from the government for the provision of those services. Moral hazard can occur when producers receive payments but the government is unable to verify that these are actually being provided. In the context of programs to address climate change, recent work has suggested that bilateral information asymmetry may apply, in that the government has better information than producers about the effectiveness of changes in production choices on GHG emissions. As in unilateral information asymmetry models, producers have better information about the costs of changes in production practices.In order to achieve objective 2, principal-agent models involving unilateral and bilateral information asymmetry will be developed to examine incentive design for achieving changes in production practices to reduce GHG emissions. This part of the project will draw on the literature on incentive compatible design and on the use of game theory.

Progress 10/01/16 to 09/30/21

Outputs
Target Audience:Provide a description of the target audience(s) reached by your efforts during this reporting period only. The target audience(s) you describe should include only those that your efforts reached during the current reporting period; this may mean that the audiences you list are only a subset of the all those you included on your project initiation. If you have no Target Audience to report, please indicate "Nothing to Report" below. Target audiences reached by this project included officials at state agricultural and environmental agencies in the Chesapeake Bay and Mid-Atlantic regions (Pennsylvania, Maryland, Virginia, Delaware), local government officials in these regions, agricultural producers in Pennsylvania and Maryland, and consultants and other technical assistance providers who work with agricultural producers in the Chesapeake Bay region. Nationally, target audiences included economists and administrators at USDA/Economic Research Service interested in economically and environmentally sustainable agricultural production practices.. Internationally, target audiences included researchers and administrators at the World Bank, International Food Policy Research Institute (IFPRI), Organization for Economic Cooperation and Development (OECD), Food and Agriculture Organization (FAO), and the Chinese Ministry of Agriculture and Rural Affairs. Researchers at these organizations and agencies carry out work related to the project on improving agricultural impacts on the environment, including reducing greenhouse gas emissions and decreasing excess nutrients from crop and livestock production. Changes/Problems:Covid-19 had a major impact on this project. Changes in university policies and procedures led to hiring delays that slowed project work. Changes to immigration policy, visa processing, and travel restrictions as a result of Covid-19 slowed down, and in some cases prevented, the hiring of new graduate research assistants. Project meetings were held entirely online, and the absence of in-person meetings negatively impacted collaborations between and among researchers and stakeholders. What opportunities for training and professional development has the project provided?Graduate and undergraduate students at Penn State University participated in project research and received instruction on project results in courses taught by David Abler and David Blandford. Students were trained on research methods, development of economic models, and preparation of manuscripts and reports. Abler also hosted four visiting scholars from China who worked on projects related to agricultural production in China How have the results been disseminated to communities of interest?An in-person group meeting with officials at state agricultural and environmental agencies in the Chesapeake Bay and Mid-Atlantic regions, local government officials in these regions, agricultural producers in Pennsylvania and Maryland, and consultants and other technical assistance providers who work with agricultural producers in the Chesapeake Bay region was held in February 2020. This in-person meeting was followed up by individual virtual meetings in summer 2021 with these officials, producers, consultants, and providers, and by virtual group meetings in November 2020 and March 2021. Presentations on the project's livestock industry results were made to the Pennsylvania Climate Change Advisory Committee in February 2020, to industry and local government officials at meetings in western Pennsylvania in 2018 and 2019, at the 2018 Annual International Meeting of the American Society of Agricultural and Biological Engineers (ABASE) in Detroit, Michigan, and at the 2021 Agricultural & Applied Economics Association Annual Meeting in Austin, Texas. Presentations on the China research results were made at China Agricultural University (China), Nanjing Agricultural University (China), the University of Göttingen (Germany), the Chinese Academy of Agricultural Sciences (Beijing, China), Tsinghua University (Beijing, China), the 2017 International Food Policy Research Institute-China Agricultural Economic Review (IFPRI- CAER) Conference (Beijing, China), and the 2018 International Conference of Agricultural Economists (Vancouver, Canada). Presentations on the Norway research results were made at the University of Bergen (Norway), at the 2017 Agricultural Economics Society annual conference (Dublin, Ireland), and at the OECD (Paris, France). What do you plan to do during the next reporting period to accomplish the goals? Nothing Reported

Impacts
What was accomplished under these goals? 1. To develop new sectoral models for food agriculture, and modify and apply existing sectoral models, to examine the impacts of alternative policy instruments (market-based and regulatory) for generating climate-friendly production systems. 2. To develop and apply micro-models of farm-level decision-making to examine the adoption of climate-friendly production methods. Goal 1: A new model was developed of the distribution of livestock inventories among U.S. counties and used to make projections of the potential impacts of climate change on livestock inventories in Pennsylvania. The projections suggest that climate change could lead to significant changes in the product composition and spatial distribution of Pennsylvania's livestock industry between 2012 and 2050. Climate change could cause Pennsylvania's poultry inventory to more than double in size. Much smaller, but still positive, increases in inventory could occur for beef cattle and hogs and pigs. The projected impact of climate change of dairy inventory for Pennsylvania as a whole is about zero, but there could be a spatial rearranging of the dairy industry within Pennsylvania. Sectoral models of agricultural production and consumption were also developed and applied to China and Norway. China accounts for about 30% of global greenhouse gas emissions, and Chinese crop and livestock production represent significant shares of China's total emissions. Modeling results indicate that income elasticities of demand in China for most cereals (general cereals, rice, and coarse grains) and all meat products (general meat, pork, poultry, beef & mutton) tend to decline as per capita income increases, except for wheat, suggesting that growth in Chinese consumption of these products should slow down during the next two decades. In Norway, results indicated that it is possible through dietary changes to achieve a 40% reduction in direct agricultural emissions of greenhouse gases without compromising domestic food supply in terms of calories and protein. Dietary changes involve a 30% reduction in meat consumption and a 10% to 20% reduction in the consumption of dairy products, counterbalanced by increased consumption of vegetable products. Goal 2: Opportunities and challenges were explored at the farm and regional levels to develop animal agriculture in western Pennsylvania in a way that is both economically and environmentally sustainable. Four main economic obstacles were found. First, western Pennsylvania lacks livestock-processing capacity. Second, the region lacks access to livestock production input suppliers, particularly those with an in-person service component, such as farm support and veterinary services. Third, the existing transportation infrastructure in western Pennsylvania is not sufficient to support a large-scale livestock industry. Finally, the existing livestock industry in western Pennsylvania lacks agglomeration economies - the benefits in terms of proximity to suppliers, workers, and customers that businesses obtain by locating close to each other. Farm-level models were also developed and applied to analyze options for reducing environmental externalities from agricultural production in China, including reducing greenhouse gas emissions. Modeling results indicate that horticultural crops (vegetables and fruits) are gradually becoming the main driving force behind fertilizer consumption in China. Given that Chinese diets have been shifting towards vegetables and fruits, the growing demand for these products is likely to spur the expansion of horticultural crops and, in turn, fertilizer consumption.

Publications

• Type: Journal Articles Status: Published Year Published: 2021 Citation: Sun, F., Abler, D. G., & Yu, X. (2021). Crop Allocation and Increasing Returns to Fertilizer Use in China. Land Economics, 97(2), 491-508.
• Type: Journal Articles Status: Published Year Published: 2021 Citation: Fang, P., Abler, D. G., Lin, G., Sher, A., & Quan, Q. (2021). Substituting organic fertilizer for chemical fertilizer: Evidence from apple growers in China Land, 10(8), 24. DOI: https://doi.org/10.3390/land10080858.
• Type: Journal Articles Status: Published Year Published: 2021 Citation: Nie, W., Li, T., & Abler, D. G. (2021). Grading attribute selection of China's grading system for agricultural products: What attributes benefit consumers more? Journal of Behavioral and Experimental Economics, 93, 10. DOI: https://doi.org/10.1016/j.socec.2021.101707.
• Type: Journal Articles Status: Published Year Published: 2020 Citation: Yu, X., Abler, D. G. (Author), & Shimokawa, S. (2020). Introduction to the special issue on sustainable food consumption in China. China Economic Review. ISBN/ISSN: 1043-951X.
• Type: Journal Articles Status: Published Year Published: 2020 Citation: Zhou, D., Yu, X., Abler, D. G., & Chen, D. (2020). Projecting Meat and Cereals Demand for China Based on a Meta-Analysis of Income Elasticities. China Economic Review.
• Type: Journal Articles Status: Published Year Published: 2019 Citation: Dong, Y., Mu, Y., & Abler, D. G. (Co-Author, 30%) (2019). Do Farmer Professional Cooperatives Improve Technical Efficiency and Income? Evidence from Small Vegetable Farms in China. Journal of Agricultural and Applied Economics, 15. ISBN/ISSN: 10.1017/aae.2019.22.
• Type: Journal Articles Status: Published Year Published: 2018 Citation: Nie, W., Abler, D. G. (Author), Zhu, L., Li, T., & Lin, G. (2018). Consumer Preferences and Welfare Evaluation under Current Food Inspection Measures in China: Evidence from Real Experiment Choice of Rice Labels. Sustainability, 10(11), 4003. ISBN/ISSN: 2071-1050.
• Type: Book Chapters Status: Published Year Published: 2019 Citation: Abler, D. G. (2019). The International Role in Agricultural Development. World Scientific Series in Grand Public Policy Challenges of the 21st Century (pp. 39-60). World Scientific., ISBN/ISSN: 9789813235397.
• Type: Conference Papers and Presentations Status: Other Year Published: 2021 Citation: Abler, D. G., & Santa Maria, N., et al. (2021). State of the science: Global pandemics and the agricultural workforce, research and policy implications. Gainesville, Florida: University of Florida.
• Type: Other Status: Other Year Published: 2019 Citation: Shortle, J., Abler, D. G., Blumsack, S., Duncan, J., Fernandez, C., Keller, K., Zarekarizi, M., Nassry, M., Nicholas, R., Royer, M., Wrenn, D., Pennsylvania Climate Impacts Assessment Update. 156 pp. Final Report, Pennsylvania Department of Environmental Protection. (September 30, 2019).
• Type: Other Status: Other Year Published: 2018 Citation: Cibin, R., Gall, H. E., Elliott, H. A., Saha, G., Abler, D. G., Shortle, J. S., Huang, X., Whitmer, W. E., Ladlee, J. R., Manurefest Destiny: Opportunities for Animal Agriculture in Western Pennsylvania. 112 pp. Final Report, Pennsylvania Department of Agriculture. (March 1, 2018).
• Type: Journal Articles Status: Published Year Published: 2019 Citation: Blandford, D., Gaasland, I., V�rdal, E., McIntosh, C. (2019). Greenhouse Gas Emissions, Land Use, and Food Supply under the Paris Climate AgreementPolicy Choice in Norway. Applied Economic Perspectives and Policy, 41(2), 249-264. https://doi.org/10.1093/aepp/ppy011

Progress 10/01/19 to 09/30/20

Outputs
Target Audience:Target audiences reached during this reporting period included officials at state agricultural and environmental agencies in the Chesapeake Bay and Mid-Atlantic regions (Pennsylvania, Maryland, Virginia, Delaware), local government officials in these regions, agricultural producers in Pennsylvania and Maryland, and consultants and other technical assistance providers who work with agricultural producers in the Chesapeake Bay region. Target audiences also included economists and administrators at USDA/Economic Research Service. Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided?Graduate and undergraduate students at Penn State University participated in project research and received instruction on project results in courses taught by David Abler. Abler also hosted three visiting scholars from China who worked on projects related to agricultural production in China. How have the results been disseminated to communities of interest?A presentation on the Pennslvania livestock industry results was made to the Pennsylvania Climate Change Advisory Committee in February 2020. An in-person group meeting with officials at state agricultural and environmental agencies in the Chesapeake Bay and Mid-Atlantic regions, local government officials in these regions, agricultural producers in Pennsylvania and Maryland, and consultants and other technical assistance providers who work with agricultural producers in the Chesapeake Bay region was held in February 2020. This in-person meeting was followed up by individual virtual meetings with these officials, producers, consultants, and providers. What do you plan to do during the next reporting period to accomplish the goals?Modeling work on the impacts of climate change on the distribution of livestock inventories among U.S. counties will continue and a manuscript will be prepared to submit for publication. Modeling work is anticipated to begin, in cooperation with USDA/Economic Research Service (ERS), using the ERS REAP (Regional Environment and Agriculture Programming) model. This work will enhance capacities to apply the REAP model to analysis of agro-environmental, trade, commodity, and other policies as well as emerging issues and trends affecting U.S. agriculture and the environment.

Impacts
What was accomplished under these goals? Goal 1: A new model was developed of the distribution of livestock inventories among U.S. counties and used to make projections of the potential impacts of climate change on livestock inventories in Pennsylvania. The projections suggest that climate change could lead to significant changes in the product composition and spatial distribution of Pennsylvania's livestock industry between 2012 and 2050. Climate change could cause Pennsylvania's poultry inventory to more than double in size. Much smaller, but still positive, increases in inventory could occur for beef cattle and hogs and pigs. The projected impact of climate change of dairy inventory for Pennsylvania as a whole is about zero, but there could be a spatial rearranging of the dairy industry within Pennsylvania. Goal 1: Models were also developed and applied to analyze trends in Chinese cereal and livestock consumption. China accounts for about 30% of global greenhouse gas emissions, and Chinese crop and livestock production represent significant shares of China's total emissions. Modeling results indicate that income elasticities of demand in China for most cereals (general cereals, rice, and coarse grains) and all meat products (general meat, pork, poultry, beef & mutton) tend to decline as per capita income increases, except for wheat, suggesting that growth in Chinese consumption of these products should slow down during the next two decades. Goal 2: Models were developed and applied to analyze options for reducing environmental externalities from agricultural production in China, including reducing greenhouse gas emissions. Modeling results indicate that horticultural crops (vegetables and fruits) are gradually becoming the main driving force behind fertilizer consumption in China. Given that Chinese diets have been shifting towards vegetables and fruits, the growing demand for these products is likely to spur the expansion of horticultural crops and, in turn, fertilizer consumption.

Publications

• Type: Journal Articles Status: Published Year Published: 2020 Citation: Yu, X., D. Abler, and S. Shimokawa. 2020. Introduction to the Special Issue on Sustainable Food Consumption in China. China Economic Review 59:101138, doi.org/10.1016/j.chieco.2017.12.005
• Type: Journal Articles Status: Published Year Published: 2020 Citation: Zhou, D., X. Yu, D. Abler, and D. Chen. 2020. Projecting Meat and Cereals Demand for China Based on a Meta-Analysis of Income Elasticities. China Economic Review 59:101135, doi:10.1016/j.chieco.2017.12.002
• Type: Journal Articles Status: Awaiting Publication Year Published: 2020 Citation: Sun, F., D. Abler, and X. Yu. 2020. Crop Allocation and Increasing Returns to Fertilizer Use in China. Forthcoming in Land Economics.
• Type: Other Status: Published Year Published: 2020 Citation: Shortle, J., D. Abler, S. Blumsack, J. Duncan, C. Fernandez, K. Keller, M. Zarekarizi, M. Nassry, R. Nichols, M. Royer, and D. Wrenn. 2020. Pennsylvania Climate Change Impacts Assessment Update. Report to Pennsylvania Department of Environmental Protection. http://files.dep.state.pa.us/Energy/Office%20of%20Energy%20and%20Technology/OETDPortalFiles/ClimateChange/2020ClimateChangeImpactsAssessmentUpdate.pdf
• Type: Conference Papers and Presentations Status: Accepted Year Published: 2020 Citation: Fan, P., and D. Abler. 2020. Substituting organic fertilizer for chemical fertilizer: A case study of apple production in China. Presentation at Northeast Agricultural and Resource Economics Association virtual annual meeting.

Progress 10/01/18 to 09/30/19

Outputs
Target Audience:Target audiences included Pennsylvania state agencies with responsibilities for climate change adaptation, including officials at the Pennsylvania Department of Agriculture (PDA) and the Pennsylvania Department of Environmental Protection (DEP). Target audiences also included Pennsylvania local government officials with responsibilities for responding and adapting to the impacts of severe weather on transportation, energy, and school infrastructure. Nationally and internationally, target audiences included policy makers in the U.S. and China interested in economically and environmentally sustainable agricultural production practices. Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided?Two graduate students worked on this project, providing them with training on research methods, development of economic models, and preparation of manuscripts and reports. How have the results been disseminated to communities of interest?Results were disseminated through two academic publications (one journal article and one book chapter), a report to the Pennsylvania Department of Environmental Protection, and presentations to local government officials in Pennsylvania and at Nanjing Agricultural University in China. What do you plan to do during the next reporting period to accomplish the goals?Development and application of sectoral and micro-level models will continue, including agent-based models of individual farmer-landowner decision-making to understand changes in behavior that impact productivity and nutrient use efficiency across spatial scales, farm-level optimization models to assess costs of nutrient loading reductions under varying farm goals (profit maximization, risk minimization), and application of an existing model of the agricultural economy (SIMPLE-G) to study economic connections and feedbacks between local, national, and international scales.

Impacts
What was accomplished under these goals? Goal 1: A new sectoral model of the livestock industry was developed in order to make projections of the potential impacts of climate change on the size of the livestock industry in Pennsylvania (dairy, beef, pork, and poultry). These models incorporate both the direct impacts of climate change within Pennsylvania itself and indirect impacts of climate change on livestock industry location decisions between Pennsylvania and other parts of the U.S. and world. Goal 2: A new micro-model of farm-level decision making was developed in order to examine the adoption of more environmentally sustainable production methods by rice producers in China.

Publications

• Type: Journal Articles Status: Published Year Published: 2018 Citation: Nie, W., D. Abler, L. Zhu, T. Li, and G. Lin (2018). Consumer Preferences and Welfare Evaluation under Current Food Inspection Measures in China: Evidence from Real Experiment Choice of Rice Labels. Sustainability, 10, 4003; doi:10.3390/su10114003
• Type: Book Chapters Status: Published Year Published: 2019 Citation: Abler, D. (2019). The International Role in Agricultural Development. In: Global Challenges for Future Food and Agricultural Policies. Ed. D. Blandford and K. Hassapoyannes. Singapore: World Scientific
• Type: Other Status: Submitted Year Published: 2019 Citation: Abler, D., A. Rasool, X. Huang, and J. Shortle (2019). Climate Change and Livestock Production in Pennsylvania. Report to Pennsylvania Department of Environmental Protection.

Progress 10/01/17 to 09/30/18

Outputs
Target Audience:Target audiences included researchers and administrators at state, national, and international agencies and organizations. At the state (Pennsylvania) level, agencies included the Pennsylvania Department of Environmental Protection and the Pennsylvania Department of Agriculture. At the national level, agencies included the Economic Research Service at theU.S. Department of Agriculture, and the U.S. Environmental Protection Agency. At the international level, organizations included the World Bank, International Food Policy Research Institute (IFPRI), and Organization for Economic Cooperation and Development (OECD). Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided?Graduate and undergraduate students at Penn State University received instruction on project results in courses taught by David Abler. Abler also hosted three visiting scholars from China who worked on projects related to agricultural production and consumption in China. How have the results been disseminated to communities of interest?Presentations on the Pennsylvania livestock research results were made at Penn State University, to industry and government officials at meetings in western Pennsylvania, and at the 2018 Annual International Meeting of the American Society of Agricultural and Biological Engineers (ABASE) in Detroit. Presentations on the Norway research results were made at the University of Bergen and at the OECD (Paris, France). Presentations on the China research results were made at Nanjing Agricultural University (Nanjing, China), the Chinese Academy of Agricultural Sciences (Beijing, China),Tsinghua University (Beijing, China), the 2017 International Food Policy Research Institute-China Agricultural Economic Review (IFPRI-CAER) Conference (Beijing, China),and the 2018 International Conference of Agricultural Economists (Vancouver, Canada). What do you plan to do during the next reporting period to accomplish the goals?Analytical and empirical work will continue on the Pennsylvania and China components of this research. The Norway component was led by David Blandford, who was on this project while he was at Penn State but has sinceretired.Two manuscripts that were submitted for publication in academic journals and received revise-and-resubmit decisions will be revised and resubmitted.

Impacts
What was accomplished under these goals? Goal 1:Sectoral models of agricultural production and consumption were developed and applied to Norway and China. In Norway, results indicated that it is possible through dietary changes to achieve a 40% reduction in direct agricultural emissions of greenhouse gases without compromising domestic food supply in terms of calories and protein. Dietary changes involve a 30% reduction in meat consumption and a 10% to 20% reduction in the consumption of dairy products, counterbalanced by increased consumption of vegetable products. In China, economic modeling focused on the sustainability of current food consumption patterns and dietary changes that could improve sustainability. Like Norway, this included reducing greenhouse gas emissions through lower meat consumption and higher fruit and vegetable consumption. Sectoral models for China were also used to project meat and cereals consumption to 2040 for China based on a meta-analysis of income elasticity estimates. Projections indicate that increases in total consumption between 2015-2017 and 2040 will be about 40% for pork, 70% for poultry, and 70% for dairy. While substantial, these are smaller increases than found in previous research. Goal 2:Opportunities and challenges were explored at the farm and regional levels to develop animal agriculture in western Pennsylvania in a way that is both economically and environmentally sustainable. Four main economic obstacles were found. First, western Pennsylvania lacks livestock-processing capacity. Second, the region lacks access to livestock production input suppliers, particularly those with an in-person service component, such as farm support and veterinary services. Third, the existing transportation infrastructure in western Pennsylvania is not sufficient to support a large-scale livestock industry. Finally, the existing livestock industry in western Pennsylvania lacks agglomeration economies - the benefits in terms of proximity to suppliers, workers, and customers that businesses obtain by locating close to each other.

Publications

• Type: Journal Articles Status: Published Year Published: 2018 Citation: Blandford, D., Gaasland, I., V�rdal, E. Greenhouse Gas Emissions, Land Use, and Food Supply under the Paris Climate AgreementPolicy Choice in Norway. Applied Economic Perspectives and Policy, https://doi.org/10.1093/aepp/ppy011 Published
• Type: Journal Articles Status: Published Year Published: 2017 Citation: Zhou, D., Yu, X., Abler, D., Chen, D. Projecting meat and cereals demand for China based on a meta-analysis of income elasticities. China Economic Review, https://doi.org/10.1016/j.chieco.2017.12.002
• Type: Journal Articles Status: Published Year Published: 2017 Citation: Yu, X., Abler, D., Shimokawa, S. Introduction to the special issue on sustainable food consumption in China. China Economic Review, https://doi.org/10.1016/j.chieco.2017.12.005

Progress 10/01/16 to 09/30/17

Outputs
Target Audience:Target audiences included researchers and administrators at the World Bank, International Food Policy Research Institute (IFPRI), Organization for Economic Cooperation and Development (OECD), and Food and Agriculture Organization (FAO). Researchers at these international organizations carry out work related to the project on improving agricultural impacts on the environment, including reducing greenhouse gas emissions and decreasing excess nutrients from crop and livestock production. Target audiences also included administrators at the Pennsylvania Department of Agriculture and the Pennsylvania Department of Environmental Protection. Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided?Graduate and undergraduate students at Penn State University received instruction on project results in courses taught by David Abler and David Blandford. Abler and Blandford also hosted three visiting scholars from China who worked on projects related agricultural production in China. How have the results been disseminated to communities of interest?Presentations on the China research results were made at China Agricultural University (China), Nanjing Agricultural University (China), and the University of Göttingen (Germany). Presentations on the Pennsylvania livestock research results were made at Penn State University and to industry and government officials at meetings in western Pennsylvania. Presentations on the Norway research results were made at the Agricultural Economics Society annual conference (Dublin, Ireland) and at the OECD (France). What do you plan to do during the next reporting period to accomplish the goals?Analytical and empirical work will continue on the Pennsylvania, China, and Norway components of the research. Three manuscripts that were submitted for publication in academic journals and received decisions of revise-and-resubmit will be revised and resubmitted. Reports on project research results currently being completed for OECD and FAO will be finalized.

Impacts
What was accomplished under these goals? Work focused on options for reducing environmental externalities from agricultural production in China, including reducing greenhouse gas emissions. China accounts for about 30% of global greenhouse gas emissions, and Chinese crop and livestock production represent significant shares of China's total emissions. Crop production is estimated to account for about one-half of anthropogenic nitrous oxide emissions in China, and livestock production more than one-fourth. Work was undertaken on the economic efficiency of fertilizer use in Chinese crop production and opportunities for improving efficiency, especially in production of fruits and vegetables that now account for a large share of China's total crop production and exports. Work was also undertaken on projections of growth and structural change in Chinese food consumption, and the implications of those changes for Chinese agricultural production and environmental externalities from production. Collaborators in the research at institutions other than Penn State included Katharine Hassapoyannes, an economic consultant; Xiaohua Yu and Fefei Sun, professor and Ph.D. candidate, respectively, at the University of Göttingen (Germany); De Zhou, professor at Nanjing Agricultural University (China); Danhong Chen, professor at Sam Houston State University (United States); Yue-Ying Mu, professor at China Agricultural University (China); Ying Dong, professor at South China Agricultural University (China); and Ivar Gaasland and Erling Vårdal, professors at the University of Bergen (Norway). Work was also undertaken on the economic potential for expanding livestock production in western Pennsylvania in the event that environmental regulations, land costs, or other policy or market factors cause livestock production in eastern Pennsylvania to decline. This work focused on identifying areas in western Pennsylvania that have (1) nutrient sinks that could absorb nutrients in livestock waste while minimizing nutrient losses to air and water; (2) suitable soils and slope for pastured livestock; (3) relatively low land costs; and (4) good access to road networks, input suppliers, and livestock processors. Work continued from a previous Hatch project on greenhouse gas emissions, land use, and food supply in Norway This work included a study of using emissions intensity measures as a guide to greenhouse gas mitigation policies for agriculture.

Publications