The document summarizes a presentation about the European Forest and Agricultural Sector Optimization Model (EUFASOM). EUFASOM is a partial equilibrium model that computes market equilibrium for agriculture and forestry sectors across Europe. It integrates environmental impacts and is used to analyze the effects of policies and structural changes. The presentation describes the model components and structure, provides an example analysis of bioenergy potentials and impacts under different policy scenarios, and discusses some challenges in using comprehensive economic models.

1. The European Forest and Agricultural Sector Optimization Model (EUFASOM) Chrystalyn Ivie S. Ramos and Uwe A. Schneider, Hamburg University 3 rd Project Meeting, Skopje, Macedonia, 10-11 September 2009 BEE project is funded by the European Commission under the Framework Programme 7 FP7 GRANT AGREEMENT N˚: 213417

2. Presentation Summary Part I: The EUFASOM Model Part II: Policy Scenario Analysis

3. Part I: The EUFASOM Model

4. EUFASOM Model Presentation Partial equilibrium model (endogenous prices) Bottom-up approach Computes agricultural and forest market equilibrium (optimization model) Constrained by resource endowments, technologies, policies Spatially explicit, dynamic Data intensive, comprehensive Integrates environmental effects Programmed in GAMS, Solved as LP

5. EUFASOM Model Presentation Supply functions implicit: technology1 (RfCvSt) yield1 technology2 (IrZeSt) yield2 Demand functions explicit: changing prices Temporal resolution: 5-year time periods, regional or national aggregation levels

6. Purpose and Objectives To advice policy makers about the agricultural and forestry sector response to structural changes based on: Policies Environmental change Technical change Socioeconomic change

7. Food Timber Fiber Bioenergy Biomaterial Carbon Sinks Land use competition Nature Reserves Sealed Lands

8. EUFASOM Structure Resources Land Use Technologies Processing Technologies Products Markets Inputs Limits Supply Functions Limits Demand Functions, Trade Limits Enviro nmental Impacts

9. EUFASOM Model Structure Processing Markets Feed mixing Labor Pasture Other Inputs Cropland Water Livestock production Forestry, Nature, Crop production Export Domestic demand Import Forest Inventory

10. EUFASOM Modeling System EUFASOM Crop & Tree Simulation Models Spatial Analysis Tools Farm level & GIS Data Viable Population Analysis Systematic Wetland Conservation Planning Engineering Equations Other Economic Models Climate Models Aggregated Agricultural Statistics

11. EUFASOM Model Clusters AROPAj Model: Farm type models, CAP reform and GHG management FORMICA Model: Regional forest management, GHG budget at forestry sector level, case studies Bio-Tech Model: Product chains of bioenergy and biomaterials, GHG balance of options EPIC Model: Agriculture, crop production, environmental factors, biogeochemistry supply curves OSKAR: Forest biomass growth, Afforestation, Deforestation, Forest Management EUFASOM Model: Trade and competition between regions, competition between sectors optima biomass supply chemistry technology and costs BEWHERE Model: Optimal location of plants according to supply and demand, competition between biomass production types Geography Case studies Technology Production technology and costs Trade and competition

12. EUFASOM Simulated Projections Projections = Scenario Results ≠ Predictions (Baselines) Scenarios  Assumptions, Policies, Society, Technologies, Environment

13. Challenges Scales, Scopes, Data Consistency Computing Power Validation Efficient Adaptation under Multiple Objectives

14. Reference Schneider U.A., J. Balkovic, S. De Cara, O. Franklin, S. Fritz, P. Havlik, I. Huck, K. Jantke, A.M.I. Kallio, F. Kraxner, A. Moiseyev, M. Obersteiner, C.I. Ramos, C. Schleupner, E. Schmid, D. Schwab, R. Skalsky (2008), “The European Forest and Agricultural Sector Optimization Model – EUFASOM”, FNU-156 , Hamburg University and Centre for Marine and Atmospheric Sciences, Hamburg. http://www.fnu.zmaw.de/

15. Part II: Policy Scenario Analysis (Bioenergy Illustration Case)

16. Illustration Case: Bioenergy Model characteristics National and regional levels (EU25 wide) Scenarios done for the agricultural sector only conventional food crops biomass from dedicated energy crops (willow, miscanthus and reed canary grass) Regional trade included Bioenergy scope: biomass, biopower, biofuels, biogas Subjected to bioenergy policy, ie: subsidies

17. Illustration Case: Bioenergy Inputs resource quantities, crop yields, production costs Bioenergy processes: technologies, biomass input, processing costs, unit bioenergy output Market data: base prices Outputs Production/Consumption quantities Economic and technical potentials Prices Trade flows Assumptions: For the EU27, about 4% of total land and about 8% of agricultural land were used to grow first generation bio-energy crops (EURURALIS,2008). Only minimum demand for biomass, everything else used for the production of bioenergy (in scenario runs)

18. Scenarios: Economic and Technical Potentials 0 250 500 750 1000 1250 1500 1750 2000 0 100 200 300 400 500 600 Biomass Incentive in Euro/ton Biomass Demand in million dry tons Competitive Economic Potential Technical Potential Current Consumption* * Consumption, 385 M dry tons (fact-finding study by Broek van den et al, 2003)

19. Scenarios: Economic and Technical Potentials Incentive in Euro/MWh Sectoral Demand in billion MWh 0 500 1000 1500 2000 0 5 10 15 20 25 30 35 40 45 50 Biogas BioPower Biofuel 60

20. Scenarios: Economic and Technical Potentials 0 500 1000 1500 2000 0 10 20 30 40 50 60 Incentive in Euro/MWh Bioenergy Demand in billion MWh Competitive Economic Potential Technical Potential

21. Impact on Food Price, Consumption and Trade Net Export Volume in Billion Euros -1000 -500 0 500 0 2000 4000 6000 8000 10000 12000 14000 16000 -10000 -5000 0 5000 Fisher Index for Food Price and Consumption Biofuel Demand in million MWh Price Consumption Net Export

22. Policies Greenhouse gas taxes (climate, environment) Other policies (agriculture, trade, etc)

23. Forest Policy: Crop Emissions Emissions (kg C/ha) Carbon price (Euro/tce) -15 -10 -5 0 5 10 15 0 50 100 150 200 250 300 Nitrogen Fertilizer Ag-Soil Carbon Irrigation Use Fossil Fuel Use

25. Power Plant Biomass Supply 0 10 20 30 40 50 60 70 80 0 20 40 60 80 100 Energy Crops (million tons) Carbon tax on energy (EUR/ton of carbon) 2010 Capacity 2030 Capacity 2050 Capacity Unrestricted Capacity

26. Thank you! Chrystalyn Ivie S. Ramos Hamburg University +49 40 42838 4830 [email_address] BEE project is funded by the European Commission under the Framework Programme 7 FP7 GRANT AGREEMENT N˚: 213417