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IFPRI IMPACT 3 Model System:Modularity

Sherman RobinsonIMPACT Model Team

International Food Policy Research Institute (IFPRI)Rome, GFSF Team Meeting, May 2015

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The IMPACT 3 Model

International Model for Policy Analysis of Agricultural Commodities and Trade

Need for a multi-disciplinary approach:• CGIAR and other collaborators:

– Economics, agronomy, hydrology, livestock, fish, crop models, nutrition/health

• Civil engineering: infrastructure• Climate change (GCMs)• Energy (biofuels, inputs)

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IMPACT version 3

159

• Countries

154

• Water Basins

320

• Food Production Units

• 58 Agricultural commodities

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IMPACT 3 Model System

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IMPACT 3.2: A Suite of Models

Multimarket model• Core global PE model

SPAM:• Spatial Production

Allocation Model

Land-Use DSSAT Crop Models Welfare

Water models• Hydrology• Water Basin Management• Water Stress on yields

Sugar and oilseeds• Processing value chains

Livestock/meat/dairy• Current version running

Nutrition/health: • Current version running

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IMPACT 3.2 to 3.3: Improvements

Data on policies: tariffs and subsidies (GTAP data, OECD PSE/CSE data• Incorporated into IMPACT 3.2 data set

Review of productivity growth trends and model improvements by CGIAR centers• Rome GFSF meeting, May, 2015

Menu of possible model improvements• Priority setting

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IMPACT 3.3: Potential Improvements

Livestock module: under development with ILRI Fish module: joint work with World Fish

• Two stage work program underway Linked global CGE model: joint work with IDS Links to environmental models

• Biodiversity: IFPRI and Bioversity• GHG emissions, nitrogen use efficiency: IFPRI

Water model improvements:• Ground water • Water quality

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IMPACT 3.3: Potential Improvements

Micronutrient module: IFPRI, PHND, A4NH and others• Under development

Health module: with Oxford (Martin Centre)• Under development

Land module: land supply and demand by type• Under development at IFPRI

Variability and extreme events• Work with UK/US collaborators (sponsored by Lloyds)

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Nutrition Module

IMPACT model solves for supply/demand for agricultural commodities in physical units• Nutrition module: post solution calculation of nutrition impacts

Nutrition content measured at the agricultural commodity level--extensive empirical work• FAO: Food balance sheets. Nutrition content of various

agricultural commodities, focusing on “energy” (calories)• IFPRI (PHND, Haddad-Smith, Derek Headey), CSIRO (Mario

Herrero), CIMSANS (Jerry Nelson), Oxford (Marco Springmann), Nestle Research– Extending food balance sheets to include more nutrients

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Nutrition Module: Regression Model

Reduced-form regression models• Statistical models linking nutrient supply at the commodity level

to nutritional status at the household/ consumer level• Haddad/Smith cross-country regression model is currently used

in IMPACT to calculate nutrition outcomes, focusing on energy– Nutrient supply is one variable among many in the model,

but is the only variable linked to IMPACT– They are updating the regression model to include more

nutrients and outcomes (obesity as well as under nourished)

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Nutrition Outcomes

Since actual household demand is for processed commodities (e.g., bread, not wheat), food balance sheets measure supply of nutrients, not what is actually consumed at the household level• Haddad-Smith regression model skips value chain to processed

food commodities • Nestle: EcodEx (Product Ecodesign Tool) considers value chains

to processed commodities and 32 nutrients• Tilman et al.0(2011), “Global food demand and the sustainable

intensification of agriculture”– Demand functions for “nutrients”

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Nutrition:

• Oxford Martin Programme on the Future of Food, study linking IMPACT model results for fruit and vegetable and red-meat consumption on body weight and health outcomes using a Markov model and detailed information on nutritional content of foods– Springmann et al. paper– Health outcomes linked more to consumption of fruits and

vegetables (micronutrients) than to energy (calories)

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Production to Nutrition

To support more structural models of food demand and nutritional status requires specifying the value chain in both PE and CGE models• Wheat to flour to bread/pasta/cake to retail sector to

households • Production of “other” food commodities such as beverages, fish

products, etc. Extensive data on nutritional content of processed food

commodities. • Feasible to use these data in models?

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Demand, Utility, and Nutrition

How to link nutritional status and commodity demand functions:• Current practice. Add equations determining nutritional status

as an “add on” after commodity demands have been determined based– Data are available, both at the agricultural and food

commodity levels. Current treatment is to work at the agricultural commodity level.

– Thin links with utility/demand theory. Households demand food commodities, not agricultural products or nutrients. Only an indirect link with nutritional status indicators.

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Demand, Utility, and Nutrition

Add nutrition indicators to the utility function, with implications of commodity demand• Hedonic quantity/price indices: consumers do not demand

nutrients, but commodities with nutritional attributes– K. Lancaster, “A New Approach to Consumer Theory”, 1966

Add nutritional status indicators as constraints in the utility optimization problem• Integrate the classic LP “diet problem” with an NLP utility

maximization problem

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IMPACT 3.4: Potential New Modules

Production: better specification of technology and supply• Optimization given production/cost functions (CGE models)• Activity/process specification of production/costs

– GLOBIOM (IIASA), MAgPIE (PIK, Potsdam)• Stylized “farm” simulation models

Value chains: more “processing” activities to move from crops/livestock to marketed “commodities”• From cows to hamburgers & milk (livestock module) • From wheat and corn to Wheaties and Cornflakes• Cassava: food vs industrial demand, tradability

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Current Value Chain Modules

Oilseeds and sugar (integrated in IMPACT)• Processing from crops (sugar cane/beet, various oil seeds) to

“commodities”: processed sugar, oils, meal• Simple cost pricing: “markup” on cost of crop inputs• Implicit assumption of competitive markets

Livestock (standalone module and integrated)• Value chain from herds to dressed meat, eggs, milk• New livestock module: elaborate specification of feed inputs

and livestock production “systems”• Simple model of commodity production: “markup” on inputs• Implicit assumption of competitive markets

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New Value Chain Modules

Interest in expanding range of value chain modules• Cassava, fish, wheat/maize/rice/soy beans• Welfare analysis using demand curves for intermediate inputs is

problematic—consumer surplus calculation is suspect• Links to nutrition analysis: more detail on food commodities• Simple specification of competitive markets is suspect

– E.g., sugar Combine value chain with industry studies

• “Structure, conduct, performance” analysis• Schmalensee and Willig: Handbook of Industiral Organization

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Linked Global CGE Model

New project: link IMPACT 3 with the GLOBE CGE model• GLOBE is based on GTAP data and written in GAMS• Includes activity/commodity distinction, as in IMPACT 3

One-way links: IMPACT to GLOBE• Crop/livestock production from IMPACT 3 passed to GLOBE,

which then is run assuming those outputs are fixed• GLOBE solves for economywide impacts (direct and indirect

links): production, employment, and prices• All welfare analysis is done in GLOBE (EV/CV, total absorption)• Links to labor markets, wages, and poverty done in GLOBE

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Linked Global CGE Model

Two-way links: IMPACT to/from GLOBE• Agricultural output from IMPACT: GLOBE generates GDP

originating in agriculture, and changes in total GDP• GDP from GLOBE sent back to IMPACT, so GDP in IMPACT

reflects changes in agricultural productivity– Currently, GDP is exogenous in IMPACT

GLOBE and IMPACT need not run on the same time step• Both can be annual, but can run on different multiyear time

steps (e.g., annual for IMPACT, every 5 years for GLOBE) GLOBE linked via a standalone module that takes input

from IMPACT and runs GLOBE

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Advantages of Modularity

“Standalone” modules can be run independently of IMPACT, but use inputs from IMPACT scenarios• Can be developed, calibrated, and tested by specialists (e.g,

from various CGIAR centers). • Designed to be used in Center research programs

Design: separate modules can reflect their disciplines• No need to compromise to “fit” one model into another• E.g. water in economic models or economics in water models—

always unsatisfactory Model development, testing, and debugging is greatly

facilitated if the modules can be run separately

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Desiderata for Modular Model Systems

“Modules” should be designed to: Operate in “standalone” mode; Read its own parameters; Initialize its own variables; Accept variables/parameters passed to it from

other modules and the environment; Pass variables that are computed within the

module to other modules or the main model; Own its set of state variables;

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Modularity: Linking Modules Modularity; “a la carte” model system

• Use the models you need, turn off those you do not need• Separate models can be run independently• Modules can run with different time steps

Standardize data transfer• Information flows• Dynamic or iterative interaction

“Data driven” model specification• IMPACT 3 multimarket model can be run at any level of

aggregation without changing the model code• Change input data and sets only: user need not even see the

GAMS code

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Modularity: Linking Modules

Three ways to link modules:• Exogenous: Information flows in one direction

– To IMPACT: hydrology, DSSAT, GCMs, SPAM– From IMPACT: welfare, nutrition/health, GLOBE/CGE

• Linked dynamically: Two-way information flow between years– Water basin management, water stress on crops– Land use by type– GDP/economywide links: GLOBE

• Endogenous: Module equations are solved simultaneously– Livestock, sugar processing, oilseeds/oils– Land allocation to crops

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IMPACT 3 Modules

Standalone modules, one-way links:• Welfare, nutrition, GLOBE (e.g., welfare, economywide impacts),

hydrology, DSSAT, GCMs

Standalone modules, inter-period links:• Water models (IWSM, water stress), land use (by land type),

livestock (herds), GLOBE (e.g., GDP, non-ag prices)

Standalone modules, intra-period links:• Land use (cropping, irrigated/rainfed), Livestock

Value chains, within IMPACT: sugar, oilseeds, livestock

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Water Models in IMPACT

Global hydrological module (GHM) assesses water availability

IMPACT Water Simulation Module (IWSM) optimizes water supply according to demands• Monthly time step• Domestic, industrial (linked to GDP/population)• Livestock, environmental, and irrigation demands• Optimizing model for irrigation demand/supply

Water stress module • Optimizing model: allocation of water to crops• Deliver crop yields to the IMPACT multimarket model

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Water: Two-Way Model Integration

Food Model• Crop areas• Population• GDP• Livestock

numbers• Prices

Water Models• Water supply• Water Stress:

shock on crop yields

Solve multimarket model given trends

and variable crop areas

Fix crop areas and

livestock; call

the water

models: solve

for water stress yields

Re-solve the

multimarket

model with fixed crop

areas and

stress yields

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In each year, solve in two steps:

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Standalone IMPACT Module: Template GAMS IMPACT-compatible standalone module

• Include file with definition of relevant IMPACT parameters• Include GDX file(s) of scenario output of IMPACT results• Load IMPACT data needed by the module

Data estimation and management• Module has its own data base, in addition to IMPACT data

Model specification and parameterization• If module is to be integrated with IMPACT, must avoid name

collisions for parameters, variables, and equations Linking to IMPACT 3

• Communication: exogenous, intra-period, within-period