LAND-USE CHANGE AND GREENHOUSE GAS EMISSIONS IN THE FAPRI-CARD MODEL SYSTEM: ADDRESSING BIAS AND UNCERTAINTY

Abstract

Even with a normalized and standardized biofuel shock, the wide range of land-use change estimates and their associated greenhouse gas (GHG) emissions have raised concern on the adequacy of existing agricultural models in this new area of analysis. In particular, reducing bias and improving precision of impact estimates are of primary concern to policy makers. This paper provides a detailed overview of the FAPRI-CARD agricultural modeling system, with particular emphasis on the modifications recently introduced to reduce bias in the results. We illustrate the impact of these new model features using the example of the new yield specification that now includes updated trend parameter, intensification and extensification effects, and a spatially disaggregated Brazil specification. The paper also provides a taxonomy of the many types of uncertainty surrounding any analysis, including parameter-coefficient uncertainty and exogenous variable uncertainty, identifying where specific types of uncertainty originate, and how they interact. Finally, FAPRI-CARD's long experience in using stochastic analysis is presented as a viable approach in addressing uncertainty in the analysis of changes in the agricultural sector, associated land-use change, and impacts on GHG emissions.