Modelling climate change impacts on agriculture and forestry with the extended LTEM (LincolnTrade and Environmental Model)

Abstract

In the land-based sectors, agricultural production generally is a source of carbon, while forestry can act as a sink. This report focuses on new research examining the interaction of the two. The core of the research is the Lincoln Trade and Environment model (LTEM), a partial equilibrium model which links trade in NZ with the main trading countries overseas, through to production and associated environmental consequences. This research report discusses the issues, methodology and results from research expanding the model to include forestry. This was done by incorporating the capabilities of the Global Forest Products Model (GFPM) into the LTEM and hence producing an integrated model of agricultural and forestry land-uses for NZ and overseas. The paper thereby reports on the development of a model of international trade that encompasses major agricultural commodities and forestry, complete with linkages and feedback with the environment and differentiated international markets. The modelling results are examined to draw general conclusions about the impact of climate change, climate policies, mitigation, and markets on both producer returns and greenhouse gas emissions in agriculture and forestry in New Zealand. These results are then discussed more broadly, in particular with an eye towards policy implications.