Specific Challenge:

Society assigns an increasing number of objectives to the policies influencing the agricultural sector and rural areas that it expects to see fulfilled. Therefore, justifications for policies extend well beyond mere food production. Evidence-based policy making implies the development and maintenance of appropriate instruments for use in the design of these policies and for the monitoring of their effects, taking advantage of new socio-economic approaches and increased possibilities opened up by progress in the ICT area.

Scope:

B. [2019] Modelling international trade in agri-food products (RIA)

Trade modelling has a long-standing tradition but some issues are notoriously difficult to assess and include in the existing simulation models. Proposals will develop appropriate methodologies to include some of these issues in existing trade models. These issues include (non-exhaustive):

• Non-tariff measures (NTM): The project will work on a methodology to assess the welfare effects of NTM (both positive and negative) and to include them in trade simulation models. This should go further than the standard gravity model approach which has strong downsides as discussed in the literature;
• Geographical Indications (GIs): The project will work on a methodology to assess the welfare effect of GIs and the resulting trade impacts of different schemes under trade negotiations;
• Zero trade flows: Current trade models have problems creating trade flows that did not exist before due to tariff or NTM reasons. This project will work on a methodology to overcome this bias;
• Quality differentiation: current trade models typically assume homogeneous goods. However, agri-food trade is becoming increasingly heterogeneous. The project should aim to broaden the commodity scope by including horizontal and vertical product differentiation trade models.

Expected Impact:

• In the short term: improvement of the capacity to model policies dealing with agriculture and related natural resources, food and international trade;
• In the medium to long term: improvement of policy design, impact assessments and monitoring.