Taking account of governance: Implications for land-use dynamics, food prices, 
and trade patterns

Wang, Xiaoxi; Biewald, Anne; Dietrich, Jan Philipp; Schmitz, Christoph; Lotze-Campen, Hermann; Humpenöder, Florian; Bodirsky, Benjamin Leon; Popp, Alexander

doi:10.1016/j.ecolecon.2015.11.018

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Taking account of governance: Implications for land-use dynamics, food prices, and trade patterns

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/persons/resource/xiaoxi.wang

Wang, Xiaoxi
Potsdam Institute for Climate Impact Research;

/persons/resource/anne.biewald

Biewald, Anne
Potsdam Institute for Climate Impact Research;

/persons/resource/Jan.Dietrich

Dietrich, Jan Philipp
Potsdam Institute for Climate Impact Research;

/persons/resource/christoph.schmitz

Schmitz, Christoph
Potsdam Institute for Climate Impact Research;

/persons/resource/Lotze-Campen

Lotze-Campen, Hermann
Potsdam Institute for Climate Impact Research;

/persons/resource/Florian.Humpenoeder

Humpenöder, Florian
Potsdam Institute for Climate Impact Research;

/persons/resource/Bodirsky

Bodirsky, Benjamin Leon
Potsdam Institute for Climate Impact Research;

/persons/resource/Alexander.Popp

Popp, Alexander
Potsdam Institute for Climate Impact Research;

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Citation

Wang, X., Biewald, A., Dietrich, J. P., Schmitz, C., Lotze-Campen, H., Humpenöder, F., Bodirsky, B. L., Popp, A. (2016): Taking account of governance: Implications for land-use dynamics, food prices, and trade patterns. - Ecological Economics, 122, 12-24.
https://doi.org/10.1016/j.ecolecon.2015.11.018

Cite as: https://publications.pik-potsdam.de/pubman/item/item_20507

Abstract

Deforestation, mainly caused by unsustainable agricultural expansion, results in a loss of biodiversity and an increase in greenhouse gas emissions, as well as impinges on local livelihoods. Countries' governance performance, particularly with respect to property rights security, exerts significant impacts on land-use patterns by affecting agricultural yield-related technological investment and cropland expansion. This study aims to incorporate governance factors into a recursive agro-economic dynamic model to simulate governance impacts on land-use patterns at the global scale. Due to the difficulties of including governance indicators directly into numerical models, we use lending interest rates as discount rates to reflect risk-accounting factors associated with different governance scenarios. In addition to a reference scenario, three scenarios with high, low and mixed divergent discount rates are formed to represent weak, strong and fragmented governance. We find that weak governance leads to slower yield growth, increased cropland expansion and associated deforestation, mainly in Latin America, Sub-Saharan Africa, South Asia and Southeast Asia. This is associated with increasing food prices, particularly in Sub-Saharan Africa and Southeast Asia. By contrast, strong governance performance provides a stable political and economic situation which may bring down deforestation rates, stimulate investment in agricultural technologies, and induce fairly strong decreases in food prices.