GTAP Resources: Resource Display
| GTAP Resource #7309 |
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"Reimagining Sustainable Intensification: A Novel Application of Modern Portfolio Theory within a General Equilibrium Framework" by Pradesha, Angga, Karl Pauw, Khalid Siddig and James Thurlow Abstract Sustainable Intensification (SI) has been envisioned as the new green revolution, aiming to increase food production to meet future demand while minimizing or even eliminating harm to the environment. Despite decades of accumulated global knowledge and widespread implementation of SI strategies, recent data shows real progress observed on the ground is still lacking and we are still witnessing a significant loss of our natural ecosystems due to the accelerating expansion of cropland. This study offers a unique approach in understanding SI by exploring a new analytical framework that is more grounded on economic and financial principles in contrast to the concept of improved agriculture practices as what is commonly perceived. We pursue this by developing an integrated Computable General Equilibrium (CGE) modeling system linked with a financial assessment model based on Modern Portfolio Modern Portfolio Theory (MPT). We applied the methodology to the Senegalese economy, focusing on cropland allocation across six major aggregated crops and assess the economic and environmental impact from year 2022 to 2030 by utilizing dynamic CGE model. Simulation results show that the current land allocation is less efficient compared to the optimal portfolios. By the year 2030, the potential increase in agriculture income through the adoption of medium and high-risk portfolio is around CFA 58 billion (1.99%) and CFA 133 billion (4.57%) respectively. The positive impacts on income also translate into poverty reduction and improved diet diversity. We also found the country could potentially save cropland area by 299 thousand hectares (66% of total cropland) in 2030 and this savings potential could be used to promote land sparing and sharing strategy given the suitability of land. However, there is a decreasing marginal rate of return generated from additional cultivated cropland with less amount of spared land. |
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- Land use - Sustainable development - Agricultural policies - Economic development - Advances in quantitative methods - Dynamic modeling - Model extension/development - Africa (West) |
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Public Access  Paper (549.7 KB) Replicated: 0 time(s)Restricted Access No documents have been attached. Special Instructions No instructions have been specified. |
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Last Modified: 9/15/2023 2:05:45 PM
