Agricultural production and emissions in GreenREFORM

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Abstract

The Danish agricultural sector emits over 20% of Danish greenhouse gases. It is therefore important that the GreenREFORM model describes agricultural production well. Modelling agriculture as an integrated part of a CGE model presents several challenges. First, the agricultural production function is not well captured by standard production functions better suited for production of industrial or service goods. Second, emissions arise at several different steps in the production process and most emissions are (in contrast to most other greenhouse gas emissions) not related to energy consumption. Third, the input-output table from Danish National Accounts system is not sufficiently disaggregated for our purposes, as we wish to model different types of agricultural production and consumption. Fourth, several key intra-farm flows are not captured by the national accounts. This document describes how these issues are dealt with in order to construct a module of agricultural production and emissions that can be integrated into GreenREFORM. The development of the modules as well as of GreenREFORM is work-in-progress. Therefore, there are aspects of the modelling that can be improved. We provide a brief discussion of these remaining modelling challenges.