PNNL

Abstract

Future socioeconomic and climate scenarios have been explored using integrated assessment models (IAMs) to understand interactions between human development and global environmental change in the long run. However, differences in trade modeling approaches are an important source of uncertainty in the assessments, particularly for regional projections. Here, we explore the critical role of trade modeling in assessing the potential future of global agroeconomics and terrestrial carbon emissions with a well-established IAM, the Global Change Assessment Model (GCAM). We update the crop trade modeling framework in GCAM from a Heckscher-Ohlin-Vanek (HOV) structure with integrated world markets (IWM) to a newly developed logit-based Armington approach with segmented regional markets (SRM). The updates make it possible to study the sensitivity of model projections of future agroeconomics and terrestrial carbon emissions to assumptions of the state and magnitude of global market integration. Our results demonstrate that assuming full global market integration, represented by homogeneous product modeling, neglecting economic geography, and excluding margins and tariffs, could lead to lower cropland use (i.e., by 115 million hectares globally) and terrestrial carbon fluxes (i.e., by 25%) by the end of the century. However, the results are highly heterogeneous across regions with more pronounced regional trade responses driven by global market integration. Our study highlights the critical role of trade modeling around product differentiation, economic geography, and regional trade parameterization in global economic or integrated assessment modeling. The results also imply that further reconciliations in trade model approaches could improve the convergence of regional results among models in model intercomparison studies.