IDEAS home Printed from
   My bibliography  Save this paper

Developing Long-run Agricultural R&D Policy in the Face of Uncertain Economic Growth


  • Cai, Yongyang
  • Golub, Alla A.
  • Hertel, Thomas W.


Projecting economic growth, population and climate over the 21st century is challenging. One approach to this problem has been the develop of "Shared Socio-economic Pathways" designed to provide a consistent characterization of alternative evolutions of population, per capita income and climate. However, recent analysis has shown that the true extent of future growth uncertainty is likely far greater than that embodied in the SSPs. We build on the innovative work of Christensen et al., in order to construct 13 independent probability distributions of economic growth in the 21st century. For each of these distributions, we use a stochastic dynamic partial equilibrium model of global land use to compute the optimal rate of R&D investment as well as the ensuing path of Total Factor Productivity (TFP) growth to 2100. When there is a significant probability of non-positive growth, the optimal response is to invest a lot in R&D today, and maintain a fairly flat trajectory over the entire century. This is in sharp contrast to the optimal path when growth rates are strictly positive. In this case, R&D spending starts out slow, and accelerates over time. Since we do not know which expert, if any, is correct, we propose a novel approach to dealing with this ambiguity by minimizing the maximum regret across all 13 optimal growth paths. This results in 50% higher R&D spending early in the century than that dictated by a mean growth rate deterministic model. However, by mid-century, optimal R&D spending levels off, and the resulting TFP plateaus at a level which is about 75% higher than at the start of the century.

Suggested Citation

  • Cai, Yongyang & Golub, Alla A. & Hertel, Thomas W., 2016. "Developing Long-run Agricultural R&D Policy in the Face of Uncertain Economic Growth," 2017 Allied Social Sciences Association (ASSA) Annual Meeting, January 6-8, 2017, Chicago, Illinois 250111, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:assa17:250111
    DOI: 10.22004/ag.econ.250111

    Download full text from publisher

    File URL:
    Download Restriction: no

    File URL:
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item

    References listed on IDEAS

    1. Brian O’Neill & Elmar Kriegler & Keywan Riahi & Kristie Ebi & Stephane Hallegatte & Timothy Carter & Ritu Mathur & Detlef Vuuren, 2014. "A new scenario framework for climate change research: the concept of shared socioeconomic pathways," Climatic Change, Springer, vol. 122(3), pages 387-400, February.
    2. Thomas W. Hertel & Kyle Stiegert & Harry Vroomen, 1996. "Nitrogen-Land Substitution in Corn Production: A Reconciliation of Aggregate and Firm-Level Evidence," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(1), pages 30-40.
    3. Anderson, Soren T., 2012. "The demand for ethanol as a gasoline substitute," Journal of Environmental Economics and Management, Elsevier, vol. 63(2), pages 151-168.
    4. Alston, Julian M. & Marra, Michele C. & Pardey, Philip G. & Wyatt, T.J., 2000. "Research returns redux: a meta-analysis of the returns to agricultural R&D," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 44(2), pages 1-31.
    5. Kenneth Gillingham & William D. Nordhaus & David Anthoff & Geoffrey Blanford & Valentina Bosetti & Peter Christensen & Haewon McJeon & John Reilly & Paul Sztorc, 2015. "Modeling Uncertainty in Climate Change: A Multi-Model Comparison," NBER Working Papers 21637, National Bureau of Economic Research, Inc.
    6. Fuglie, Keith O. & Heisey, Paul W., 2007. "Economic Returns to Public Agricultural Research," Economic Brief 6388, United States Department of Agriculture, Economic Research Service.
    7. Cranfield, J. A. L. & Preckel, Paul V. & Eales, James S. & Hertel, Thomas W., 2002. "Estimating consumer demands across the development spectrum: maximum likelihood estimates of an implicit direct additivity model," Journal of Development Economics, Elsevier, vol. 68(2), pages 289-307, August.
    8. Jeffrey Reimer & Thomas Hertel, 2004. "Estimation of International Demand Behaviour for Use with Input-Output Based Data," Economic Systems Research, Taylor & Francis Journals, vol. 16(4), pages 347-366.
    9. Pardey, Philip G. & Beintema, Nienke M. & Dehmer, Steven & Wood, Stanley, 2006. "Agricultural research: a growing global divide?," Food policy reports 17, International Food Policy Research Institute (IFPRI).
    10. Elmar Kriegler & Jae Edmonds & Stéphane Hallegatte & Kristie Ebi & Tom Kram & Keywan Riahi & Harald Winkler & Detlef Vuuren, 2014. "A new scenario framework for climate change research: the concept of shared climate policy assumptions," Climatic Change, Springer, vol. 122(3), pages 401-414, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Christophe Gouel & Houssein Guimbard, 2018. "Nutrition Transition and the Structure of Global Food Demand," Post-Print hal-01820555, HAL.
    2. Christophe Gouel & Houssein Guimbard, 2019. "Nutrition Transition and the Structure of Global Food Demand," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 101(2), pages 383-403.
    3. Zuzana Smeets Kristkova & Michiel van Dijk & Hans van Meijl, 2015. "Long-term projections of global food security with R&D-driven technological progress," EcoMod2015 8601, EcoMod.
    4. Roberto Roson & Richard Damania, the World Bank, Washington D.C., 2016. "Simulating the Macroeconomic Impact of Future Water Scarcity," EcoMod2016 9167, EcoMod.
    5. Solberg, Birger & Moiseyev, Alex & Hansen, Jon Øvrum & Horn, Svein Jarle & Øverland, Margareth, 2021. "Wood for food: Economic impacts of sustainable use of forest biomass for salmon feed production in Norway," Forest Policy and Economics, Elsevier, vol. 122(C).
    6. Lanzi, Elisa & Dellink, Rob & Chateau, Jean, 2018. "The sectoral and regional economic consequences of outdoor air pollution to 2060," Energy Economics, Elsevier, vol. 71(C), pages 89-113.
    7. Qin, Pengcheng & Xu, Hongmei & Liu, Min & Xiao, Chan & Forrest, Kate E. & Samuelsen, Scott & Tarroja, Brian, 2020. "Assessing concurrent effects of climate change on hydropower supply, electricity demand, and greenhouse gas emissions in the Upper Yangtze River Basin of China," Applied Energy, Elsevier, vol. 279(C).
    8. Yongyang Cai, 2020. "The Role of Uncertainty in Controlling Climate Change," Papers 2003.01615,, revised Oct 2020.
    9. Nigel W. Arnell, 2016. "The global-scale impacts of climate change: the QUEST-GSI project," Climatic Change, Springer, vol. 134(3), pages 343-352, February.
    10. Fujimori, Shinichiro & Dai, Hancheng & Masui, Toshihiko & Matsuoka, Yuzuru, 2016. "Global energy model hindcasting," Energy, Elsevier, vol. 114(C), pages 293-301.
    11. Zuzana Smeets Kristkova & Michiel van Dijk & Hans van Meijl, 2017. "Assessing the Impact of Agricultural R&D Investments on Long-Term Projections of Food Security," Frontiers of Economics and Globalization, in: Andrew Schmitz & P. Lynn Kennedy & Troy G. Schmitz (ed.), World Agricultural Resources and Food Security, volume 17, pages 1-17, Emerald Publishing Ltd.
    12. Speers, Ann E. & Besedin, Elena Y. & Palardy, James E. & Moore, Chris, 2016. "Impacts of climate change and ocean acidification on coral reef fisheries: An integrated ecological–economic model," Ecological Economics, Elsevier, vol. 128(C), pages 33-43.
    13. McManamay, Ryan A. & DeRolph, Christopher R. & Surendran-Nair, Sujithkumar & Allen-Dumas, Melissa, 2019. "Spatially explicit land-energy-water future scenarios for cities: Guiding infrastructure transitions for urban sustainability," Renewable and Sustainable Energy Reviews, Elsevier, vol. 112(C), pages 880-900.
    14. Richard Taylor & Ruth Butterfield & Tiago Capela Lourenço & Adis Dzebo & Henrik Carlsen & Richard J. T. Klein, 2020. "Surveying perceptions and practices of high-end climate change," Climatic Change, Springer, vol. 161(1), pages 65-87, July.
    15. Wiebe, Keith & Sulser, Timothy B & Dunston, Shahnila & Rosegrant, Mark W. & Fuglie, Keith & Willenbockel, Dirk & Nelson, Gerald C., 2020. "Modeling impacts of faster productivity growth to inform the CGIAR initiative on Crops to End Hunger," SocArXiv h2g6r, Center for Open Science.
    16. Roberto Roson & Richard Damania, 2016. "Simulating the Macroeconomic Impact of Future Water Scarcity: an Assessment of Alternative Scenarios," IEFE Working Papers 84, IEFE, Center for Research on Energy and Environmental Economics and Policy, Universita' Bocconi, Milano, Italy.
    17. Vanessa J. Schweizer, 2020. "Reflections on cross-impact balances, a systematic method constructing global socio-technical scenarios for climate change research," Climatic Change, Springer, vol. 162(4), pages 1705-1722, October.
    18. Govorukha, Kristina & Mayer, Philip & Rübbelke, Dirk & Vögele, Stefan, 2020. "Economic disruptions in long-term energy scenarios – Implications for designing energy policy," Energy, Elsevier, vol. 212(C).
    19. Thomas W. Hertel & Jevgenijs Steinbuks & Wallace E. Tyner, 2016. "What Is the Social Value of Second Generation Biofuels?," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 38(4), pages 599-617.
    20. Wu, Rui & Dai, Hancheng & Geng, Yong & Xie, Yang & Tian, Xu, 2019. "Impacts of export restructuring on national economy and CO2 emissions: A general equilibrium analysis for China," Applied Energy, Elsevier, vol. 248(C), pages 64-78.

    More about this item


    Agricultural and Food Policy;


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:assa17:250111. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.