Global economic growth and agricultural land conversion under uncertain productivity improvements in agriculture
Name
MITJPSPGC_Rpt313.pdf
Size
2.28 MB
Format
Adobe PDF
Checksum (MD5)
7da77a3cb74a0b75c2b76e8a779861a8
Author(s)
Lanz, B.
Dietz, S.
Swanson, T.
Date Issued
June 2017
Publisher
MIT Joint Program on the Science and Policy of Global Change
Citation
Report 313
Series/Report no.
MIT Joint Program Report Series;313
Abstract
We study how stochasticity in the evolution of agricultural productivity interacts with economic and population growth at the global level. We use a two-sector Schumpeterian model of growth, in which a manufacturing sector produces the traditional consumption good and an agricultural sector produces food to sustain contemporaneous population. Agriculture demands land as an input, itself treated as a scarce form of capital. In our model both population and sectoral technological progress are endogenously determined, and key technological parameters of the model are structurally estimated using 1960–2010 data on world GDP, population, cropland and technological progress. Introducing random shocks to the evolution of total factor productivity in agriculture, we show that uncertainty optimally requires more land to be converted into agricultural use as a hedge against production shortages, and that it significantly affects both optimal consumption and population trajectories.
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