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capri:concept:supply [2011/04/04 14:32] – created ::1capri:concept:supply [2022/11/07 10:23] (current) – external edit 127.0.0.1
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 +      <H1>Supply module</H1>
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 +     <H3>Overview</H3>
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 +     <div style="float:right;padding:20px>
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 +       <a href="images\nuts2.jpg"><img style="text-decoration: none;border: none;color: white" src="images\nuts2.jpg" width="300px"/></a></div>
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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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 +
 +
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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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 +
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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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 +
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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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 +
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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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 +
 +
 +
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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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 +
 +
 +
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 +     <H3>Model calibration and simulation response</H3>
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 +
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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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 +
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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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 +
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 +     <H3>Environmental indicators and restrictions</H3>
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 +
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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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 +
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 +     <H3>Integration in overall modelling system</H3>
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 +
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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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 +
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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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 +
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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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 +
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 +     <H3>Data</H3>
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 +
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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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 +
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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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 +
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 +     <H3>Technical realisation</H3>
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 +
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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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