Agricultural/Forestry Greenhouse Gas Modeling Forum October 1-3, 2001

1. Top-Down Simulation of Energy, Agriculture, and Land Use Ron SandsJoint Global Change Research Institute: University of Maryland and Pacific Northwest National Laboratory Agricultural/Forestry Greenhouse Gas Modeling Forum October 1-3, 2001

2. Acknowledgements • Pacific Northwest National Laboratory • Jae Edmonds • Hugh Pitcher • Steve Smith • Chris MacCracken (former PNNL) • Marshall Wise (former PNNL) • Dartmouth College • Kenny Gillingham (intern)

3. Overview • Uses for top-down economic models • SGM background • Marginal abatement curves for energy • Applications • PNNL approach to agriculture and land use • Modular development of agricultural sector • Application to commercial biomass

4. Top-Down Economic Models • Project baseline greenhouse gas emissions over time for a country or group of countries • Find the least-cost way to meet any particular emissions constraint • Provide a measure of the carbon price, in dollars per metric ton • Provide some measure of the overall cost of meeting an emissions target

6. SGM Production Sectors

9. Return to 1990 ($ per ton C) Annex I targets = 1990 carbon emissions Carbon policy starts in 2005 SGM reference case

10. Return to 1990 ($ per ton C) Annex I targets = 1990 carbon emissions Carbon policy starts in 2005 EIA reference case

12. Mitigation at Least Cost • Consider all opportunities for reducing greenhouse gas emissions • Energy system efficiency • Non-CO2 greenhouse gases • Expansion of commercial biomass • Carbon sequestration in terrestrial ecosystems • Carbon capture and sequestration • Top-down models should be a tool for integrating knowledge of sector specialists

13. 1998 Administration Analysis • Analysis by Council of Economic Advisers • Reduced-form analysis • SGM was not run directly • Marginal abatement curves derived from many SGM model runs • Emissions baselines taken from a different source (U.S. Energy Information Administration) • Supply curve for non-CO2 greenhouse gases (U.S. Environmental Protection Agency)

14. Why Model Agriculture? • Carbon emissions from energy consumption are not the whole story • Carbon emissions from land-use change • Carbon mitigation using biomass fuels • CH4 and N2O emissions from agriculture • Impact of climate change on agricultural productivity

15. PNNL Approach to Agriculture • Modular development of Agriculture and Land Use (AgLU) component • Key Drivers • Population growth • Demand for food and forest products • Rate of increase in crop yield

17. Products in AgLU • Crops (calories) • Rice and Wheat • Coarse Grains • Oil Crops • Other Crops • Processed Crops (calories) • Vegetable Oils • Sweeteners and Alcoholic Beverages • Animal Products (calories) • Beef and other Ruminant Livestock • Pork and Poultry • Commercial Biomass (calories or metric tons) • Forest Products (cubic meters)

18. 1990 Food Consumption

19. Land Allocation

20. Methodology • Forest Dynamics • Trees in AgLU grow for 45 years • Two forest markets (current and future) needed for model stability • Land Allocation • Land owners compare economic returns across crops, biomass, pasture, and future trees • Underlying probability distribution of yields per hectare

21. Land Shares si = share of land in use i = profit rate per hectare in land use i l determines rate of change in land use (is a function of correlation within land-use nest)

24. Status of SGM • Quick Turnaround • Reduced form • Rely on marginal abatement curves from sector models • Model Development • Move AgLU into SGM • Rely on sector models to parameterize agriculture and forestry • Collaboration with Texas A&M University and Lawrence Berkeley National Laboratory