The purpose of a baseline is to serve as a comparison point or comparison time series for counterfactual analysis. The baseline is interpreted as a projection in time covering the most probable future development of the European agricultural sector under the status-quo policy and including all future changes already foreseen in the current legislation.
Conceptually, the baseline should capture the complex interrelations between technological, structural and preference changes for agricultural products world-wide in combination with changes in policies, population and non-agricultural markets. Given the complexity of these highly interrelated developments, baselines are in most cases not a straight outcome from a model but developed using a combination of trend analysis, model runs and expert consultations. In this process, model parameters such as elasticities and exogenous assumptions, e.g., technological progress captured in yield growth, are adjusted in order to achieve plausible results (as regarded by experts, e.g. European Commission projections). It is almost unavoidable that the process is somewhat intransparent.
The kind of baseline process described above is not specific to CAPRI, but is found also in other large scale modelling projects. Two typical examples are discussed here.
As is the case in other agencies, the CAPRI baseline is also fed by external (“expert”) forecasts, as well as by trend forecasts using data from the national ‘COCO’ and regionalized CAPREG databases (Chapters The Complete and Consistent Data Base (COCO) for the national scale and The Regionalised Data Base (CAPREG)). The purpose of these trend estimates is, on the one hand, to compare expert forecasts with a purely technical extrapolation of time series and, on the other hand, to provide a ‘safety net’ position in case no values from external projection are available. Usually the projections for a CAPRI baseline are a combination of expert data (e.g. from FAO, European Commission, World Bank, other research teams and even private entreprises) and simple statistical trends of data contained in the CAPRI database.