Prototype stochastic general equilibrium model of a global food system

Abstract

A model of a global food system need at least two points in time per year and two locations with different growing seasons so that planting and harvesting have different timing across locations. Moreover, planting decisions reflect soil states affected by stochastic weather since previous point in time, while harvest reflect the planting decisions and the stochastic weather through the growing season up to next point. Decisions on trade, storage and consumption are taken at every point in time. Despite stochastic influence, deterministic stationary general equilibrium is applicable. The world then runs in circles through a likely sequence of N given weather scenarios, while the decision-makers do not know the next scenario. The model will provide a setting in which the consequences of climate change can be assessed both with respect to expectations and variances. It will by construction be an integrated assessment model (IAM) in the sense that outcomes follow from agent choices in a world of biophysical processes. In this case the biophysical world is stochastic. At the prototype stage neither existing behavioral nor bio-physical models will be applied.