09 Jan 2023
09 Jan 2023
Status: this preprint is open for discussion.

Assessing Effects of Climate and Technology Uncertainties in Large Natural Resource Allocation Problems

Jevgenijs Steinbuks1, Yongyang Cai2, Jonas Jaegermeyr3,4,5, and Thomas W. Hertel6 Jevgenijs Steinbuks et al.
  • 1Office of the Chief Economist, Infrastructure Vice Presidency, The World Bank, Washington, DC, USA
  • 2Department of Agricultural, Environmental and Development Economics, The Ohio State University, Columbus, OH, USA
  • 3Department of Computer Science, University of Chicago, Chicago, IL, USA
  • 4NASA Goddard Institute for Space Studies, New York, NY, USA
  • 5Climate Impacts and Vulnerabilities, Potsdam Institute for Climate Impact Research, Potsdam, Germany
  • 6Center for Global Trade Analysis, Purdue University, West Lafayette, IN, USA

Abstract. The productivity of the world's natural resources is critically dependent on a variety of highly uncertain factors, which obscure individual investors and governments that seek to make long-term, sometimes irreversible investments in their exploration and utilization. These dynamic considerations are poorly represented in disaggregated resource models, as incorporating uncertainty into large-dimensional problems presents a challenging computational task. In this paper, we apply the SCEQ algorithm (Cai and Judd, 2021) to solve a large-scale dynamic stochastic global land resource use problem with stochastic crop yields due to adverse climate impacts and limits on further technological progress. For the same model parameters, the range of land conversion is considerably smaller for the dynamic stochastic model as compared to deterministic scenario analysis. The scenario analysis can thus significantly overstate the magnitude of expected land conversion under uncertain crop yields.

Jevgenijs Steinbuks et al.

Status: open (until 06 Mar 2023)

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Jevgenijs Steinbuks et al.

Jevgenijs Steinbuks et al.


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Short summary
This paper applies cutting-edge numerical methods to show how uncertain climate change and technological progress affect the future utilization of the scarce world's land resources. The paper's key insight is to illustrate how much global cropland will expand when future crop yields are unknown. The more uncertain the future crop yields are, the more forest conversion will be necessary to sustain human welfare. Some of that conversion takes place even when crop yields are not actually affected.