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| <H1>Supply module</H1> |
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| <H3>Overview</H3> |
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| <P>The supply module comprises about <A HREF="/dokuwiki/doku.php?id=capri:concept:activities">50 crop and animal |
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| activities</A> for each of the around 280 regions (at the so-called NUTS-2 |
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| level covering EU27, Norway, Western Balkans and Turkey) or about 2500 farm type models for EU27 (the remaining regions |
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| continue to operate at regional level), and includes about <A HREF=/dokuwiki/doku.php?id=capri:concept:outputs>50 inputs and outputs</A>. |
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| Each independent model maximises regional agricultural income |
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| at given prices and subsidies, subject to constraints on land, policy |
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| variables and feed und plant nutrient requirements in each region.</P> |
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| <P><I>Income</I> is defined as the gross value added (GVA) at producer prices plus |
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| direct subsidies (premiums). Costs neither included in the GVA nor |
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| covered by the restrictions in the NLP models are captured by a |
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| quadratic cost function.</P> |
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| <P><I>Feed requirements</I> for each animal comprise energy and crude protein |
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| as equality constraints, and a corridor for a dry matter. For ruminants, |
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| different fibre restrictions are added. The requirement are met |
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| by chosing a cost minimal feed mix based on 10 types of feedingstuff, |
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| which comprise 5 types of non-marketable fodder and 5 types of concentrates. |
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| The mix is further steered by minimum and maximum bounds for the feedingstuff |
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| and a quadratic cost function depending on the feed input coefficients |
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| which allows for interior solutions and a smooth response to price changes.</P> |
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| <P>Most crop activities features a higher and lower intensive variant to allow |
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| for endogenous yield adjustments. Yields and yield depending inpust are also |
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| updated based on price elasticities</P> |
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| <P>Since winter 2009/2010, CAPRI comprises a <B>land supply curve</B> which |
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| depends on the marginal return to land from the agricultural sector in each |
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| region respectively farm type. Further on, substitution between permanent grass land |
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| and arable land was added. Before, grass land and arable land were two fixed endowment.</P> |
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| <P>The module ist based on a <I>template approach</I>: the models for each region |
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| are structurally identically, i.e. the comprise the same equations and variables, |
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| and differences between the regions are expressed in parameters. That allows |
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| an efficient uniform handling of the models and their results.</P> |
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| <H3>Model calibration and simulation response</H3> |
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| <P>The simulation response of the models depends on the interplay of the contraints |
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| and the objective function. Given the relatively small number of contraints |
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| directly impacting on the allocation of the production activities, the |
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| simulation response is too a large extent depending on the parametrization of |
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| the quadratic terms of the cost function.</P> |
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| <P>The slope terms of the cost function are either estimated from |
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| time series analysis (<A HREF=http://hss.ulb.uni-bonn.de/2007/1157/1157.pdf>Jansson 2007</A>) |
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| or derived from exogenous elasticities. The models may hence be seen |
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| as a kind of hybrid approach combining features from traditional |
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| programming models with dual econometric estimation (see also <A HREF=http://www.ilr1.uni-bonn.de/agpo/staff/heckelei/heckelei_hab.pdf>Heckelei 2002</A>). |
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| The cost functions' constant terms let the models |
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| calibrate to a given vector of technical coefficients, levels of the |
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| production activities, prices and subsidies. One set of parameters |
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| is generated to let the regional models calibrate to a three-year |
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| average around the base year, another to ensure calibration to the |
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| reference run.</P> |
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| <H3>Environmental indicators and restrictions</H3> |
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| <P>From the input coefficients and activity levels, different |
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| <A HREF=/dokuwiki/doku.php?id=capri:concept:envind>environmental |
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| indicators</A> can be derived such as nutrient balances or gaseous emissions. Part of |
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| the these indicators had been also embedded in constraints |
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| to e.g. allow for modeling a trading scheme for agricultural Green House Gas emissions.</P> |
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| <H3>Integration in overall modelling system</H3> |
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| <P>The regional programming models steer the supply response and too a large extent the feed |
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| demand for the countries covered by them in the overall modelling system, whereas the prices are determined |
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| in the <A HREF=/dokuwiki/doku.php?id=capri:concept:market>market module</A>. A point estimate of the Jacobian matrix of the frist order |
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| activity level equations from the regional models is used to parametrize the supply response for the |
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| countries covered by the regional models, ensuring a similar supply response.</P> |
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| <P>In each iteration between the supply and market modules, the supply and |
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| feed demand equations in the market module are shifted as to match at prices |
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| in the current simulation the response from the regional models. The price |
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| changes from the market are used to update yields and related input coefficients.</P> |
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| <P>The results of the regional models are input a post-model analysis to determine |
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| different economic and environmental indicators. They are also <A HREF="/dokuwiki/doku.php?id=capri:concept:spatialdownscaling"> |
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| spatially downscaled</A> to 1x1 km grid cell clusters for EU27 to allow for spatially |
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| explicite environmental analysis.</P> |
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| <H3>Data</H3> |
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| <P>The ex-post data for the supply part (hectares of crops, animal herds, |
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| yields) are taken mainly from EUROSTAT's REGIO domain. Data are consolidated |
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| to match national statistics, and missing ones are estimated from time series |
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| and/or national ones. The national data are maintained and updated together |
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| with the CAPSIM model by a module called CoCo (Completeness and Consistentency).<P> |
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| <P><I>Input coefficients</I> |
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| per activity and region are estimated as to exhaust the national sectoral |
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| costs shown in the Economic Account for Agriculture, while coming close to |
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| the Standard Gross Margins published by European Commission. The estimates |
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| are differently derived for feed input coefficients, fertilizer input |
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| coefficients and the remaining inputs. The set of requirement constraints |
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| discussed above is simulaneouly adjusted during the estimation of the feed input coefficients |
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| to define a plausible mix in the base year which exhaust both regional |
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| fodder availability and the feed quantities for marketable products found |
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| in national market balances. Crop specific regional fertilizer application rates |
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| draw on national expert survey on typical fertilization doses, regional organic |
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| nutrient availability and crop retention estimated from crop yields. For the |
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| remaining input coefficients, econometrically derived estimates from FADN |
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| are used.</P> |
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| <H3>Technical realisation</H3> |
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| <P>As the rest of the CAPRI modelling system, the supply model is realised in |
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| <A HREF=http://WWW.GAMS.COM>GAMS</A> and solved with the non-linear solver <A HREF=http://www.conopt.com>CONOPT</A> |
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| developed by Arne Drud. |
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| Several GAMS processes are spawned in parallel to regional models in parallel, which allows to solve all 280 regions on |
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| a powerful eight-processor machiune in about 8 seconds and the close to 1900 farm type models in 45 seconds.</P> |
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