Overview of the GTAP-DynW Model

The GTAP-DynW model is an extensive CGE model utilizing the GTAP Data Base Version 10 for global trade interactions. The model is forward-looking and includes 18 Agro-Economic Zones for agricultural analysis. It also incorporates climate change damage functions following Kompas and Van Ha’s methodology.
In GTAP-DynW, producers within each region combine various inputs to create goods and services for domestic consumption or export. The model considers future impacts and policy settings with specific equations governing capital and investment dynamics.

Water Stress and Agriculture

Agricultural production under water stress is modeled with a CES production function, accounting for domestic and imported demands and value-added contributions. Water stress affects land use efficiency, derived from WRI’s global water data, which is integrated into GTAP-DynW’s regional framework. The impact on agricultural outputs is calibrated using a CES function that factors in intermediate inputs and endowment demands.

Heat Stress Impacts

Heat stress effects are modeled through damage functions, using parameters from Roson and Sartori. These functions estimate the impacts of climate variables on productivity, income, and resources. The GTAP-DynW model includes heat stress shocks affecting agricultural and labor productivity based on projections by Kompas and others.

Food Security Analysis

The model assesses food security by calculating the nutritional supply from food commodities and comparing it to the required daily intake. The rates of food insecurity are determined by the gap between calorie demand and production, resulting in an estimate of the number of persons with severe food insecurity. These calculations consider regional variations and are aggregated for global analysis.

Summary of GTAP-DynW Model and its Implications

The GTAP-DynW model is an advanced Computable General Equilibrium (CGE) model, leveraging the extensive GTAP Data Base Version 10, to analyze international trade and economic impacts across interconnected countries and regions. Unlike traditional recursive models, GTAP-DynW is intertemporal and forward-looking, incorporating 18 Agro-Economic Zones (AEZ) to account for critical climate, soil, and terrain conditions affecting agricultural productivity.

Key Features:

1. Intertemporal Structure: Producers within each region combine various inputs (land, labor, capital, intermediate goods, and natural resources) to produce goods and services, considering future impacts and policy settings.
2. Climate Change Damage Functions: The model integrates climate change damage functions, reflecting the effects of climate variability on economic outputs and resource endowments.
3. Water Stress Effects: Water stress derived from WRI projections significantly impacts agricultural land use efficiency. The model spatially integrates GIS water data with GTAP-DynW’s regional framework to project water stress effects on agricultural production.
4. Heat Stress Effects: Heat stress damage functions are included to assess the impact of global warming on labor productivity and agricultural outputs. These functions are based on parameters from previous studies and GTAP database versions.
5. Food Security: GTAP-DynW evaluates food security by tracking nutritional supply and demand. It calculates the number of persons experiencing severe food insecurity based on the gap between food production and nutritional requirements.
   

   Implications:
   

   • Agricultural Productivity: Under climate change scenarios, water and heat stress are projected to reduce agricultural productivity, thereby impacting food security.
   • Economic Outcomes: The intertemporal approach allows for the assessment of future economic impacts and policy effectiveness in mitigating climate change effects.
   • Regional Analysis: By integrating detailed regional climate data, the model provides nuanced insights into how different areas might experience and respond to climate stressors.
     

     Conclusion:
     

     The GTAP-DynW model is a comprehensive tool for analyzing the multifaceted impacts of climate change on global trade, agricultural productivity, and food security. It highlights the critical interplay between economic policies and environmental stressors, offering valuable foresight for policymakers and stakeholders aiming to address climate challenges.