Thomas Hertel- Integrated Policies for the Triple Planetary Crisis.pdf

This OECD technical workshop will bring together leading experts on economic, biophysical, and integrated assessment modelling of the interactions between climate change, biodiversity loss, and pollution. The workshop will take stock of ongoing modelling efforts to develop quantitative pathways to study the drivers and impacts of the triple planetary crisis, and the policies to address it. The aim is to identify robust modelling approaches to inform the work for the upcoming OECD Environmental Outlook.

1. Global-to-Local Analysis of Systems Sustainability
Department of Agricultural Economics, Purdue University
403 West State Street, West Lafayette, IN 47907 USA
[email protected]
Integrated Policies for the Triple
Planetary Crisis
Presentation by Thomas Hertel, Purdue University
To the OECD workshop on Modelling the Triple Planetary Crisis
Paris, February 16, 2024
For more details, visit: https://glassnet .net

2. Multi- scale Analysis of Triple Crisis is needed to capture Global-Local-
Global Linkages: The GLASSNET Challenge
Biodiversity and water
pollution are inherently
localized crises
However, global forces are
driving these local
sustainability stresses
The character of these stresses
& solutions vary by locality
Furthermore, local responses
feed back with regional and
global consequences
See: Hertel et al., Special issue of Environmental Research
Letters, 2023: “Focus on GLG Analysis of Sustainability”

3. Outline of talk (based on workshop questions)
How can models from different disciplines be combined to provide more robust and
comprehensive insights? Illustrated in each of these examples
Quantifying key drivers behind the triple planetary crisis:
Population change as a driver of biodiversity losses as well as recovery
Global drivers of groundwater depletion in the Western US
Quantifying interactions between climate change, biodiversity loss, and pollution: PNAS
paper on climate policy and water quality
What are the key biophysical risks of the triple planetary crisis, and how do they
translate to economic outcomes?
Which policies are needed to address climate change, biodiversity loss, and pollution,
and how can modelling efforts quantify the corresponding synergies and trade-offs?
US water pollution and alternative local policies
Investments in knowledge capital: productivity growth as a sustainability policy
3

4. Population remains a key driver of the triple
crisis, but demographic trends are changing
4
Cisneros-Pineda et al. In Review, 2024
Zoom to small
population
regions
Population growth rates are declining in all regions, levels are also beginning to decline:
What are the implications for biodiversity losses (or recovery)?

5. Biodiversity impact (potential species loss) in different agro-
ecological zones due to population changes ONLY between
2001- 2021 (A) and 2021- 2041 (B)
5
Cisneros-Pineda et al. In Review, 2024
A
B
Net additions to global population are smaller in
2021- 2041, but biodiversity losses are larger and
more concentrated

6. Regional biodiversity impact (rows -potential species loss red or
gain green) due to regional population changes (columns)
between 2001- 2021 (A) and 2021- 2041 (B)
6
Cisneros-Pineda et al. In Review, 2024
B
A

7. Outline of talk (based on workshop questions)
How can models from different disciplines be combined to provide more robust and
comprehensive insights?
Quantifying key drivers behind the triple planetary crisis:
Population change as a driver of biodiversity losses as well as recovery
Global drivers of groundwater depletion in the Western US
Quantifying interactions between climate change, biodiversity loss, and pollution: PNAS
paper on climate policy and water quality
What are the key biophysical risks of the triple planetary crisis, and how do they
translate to economic outcomes?
Which policies are needed to address climate change, biodiversity loss, and pollution,
and how can modelling efforts quantify the corresponding synergies and trade-offs?
US water pollution and alternative local policies
Investments in knowledge capital: productivity growth as a sustainability policy
7

8. Agriculture is central to addressing the planetary boundaries for biodiversity,
nutrient flows, freshwater, climate –what is driving this sector’s resource use?
Eutrophication linked to excessive nitrogen
fertilizer and phosporoususe in river basins
Source: Potter et al. (2010)
Source: Richardson et al. (2023)
Agriculture is the primary driver of deforestation –
leading to biodiversity loss
(Busch and Ferretti-Gallon)

9. SIMPLE-G model facilitates Global-Local-Global
Analysis of Sustainability
9
Baldos et al. (2020), Environmental Modelling and Software

10. -10
40
90
140
190
United States
607
-10
40
90
140
190
China
-10
40
90
140
190
Europe
-10
40
90
140
190
Latin America
641
-10
40
90
140
190
South Asia
-10
40
90
140
190
M. East & N.
Africa
260
-10
40 90
140 190
Sub Saharan
Africa
-10
40
90
140
190
Rest of Asia
35
100
43
-10
40
90
140
190
World
population
per capita
income
productivity
Global drivers of agricultural output around the world:
Population, income, and productivity growth, 2010- 2050
Haqiqi et al. (Environmental Research Letters,2023)

11. Global drivers of regional changes in annual groundwater
withdrawals (from 2010 to 2050 % change): Results from SIMPLE- G
(40)
(20)
-
20
40
60
(percent)
Global population growth Global income growth
Global productivity growth US biofuel growth
Haqiqi et al. (Environmental Research Letters,2023)

12. Global drivers of change in US annual groundwater
withdrawal (from 2010 to 2050 % change)
Drivers of US
Groundwater
by 2050
(30)
(25)
(20)
(15)
(10)
(5)
-
5
10
15
20
25
United
States
(percent)
US TFP
US biofuel growth
Global productivity growth
Global income growth
Global population growth
Haqiqi et al. (ERL, 2023)

13. Global demand drivers of gridded change in US annual groundwater
withdrawal (from 2010 to 2050%): RoW developments are dominant
US (income + population)
Rest of World (income + population)
Haqiqi et al. (2022), International Journal of Water Resources Development

14. Outline of talk (based on workshop questions)
How can models from different disciplines be combined to provide more robust and
comprehensive insights?
Quantifying key drivers behind the triple planetary crisis:
Population change as a driver of biodiversity losses as well as recovery
Global drivers of groundwater depletion in the Western US
Quantifying interactions between climate change and pollution
What are the key biophysical risks of the triple planetary crisis, and how do they
translate to economic outcomes?
Which policies are needed to address climate change, biodiversity loss, and pollution,
and how can modelling efforts quantify the corresponding synergies and trade-offs?
US water pollution and alternative local policies
Investments in knowledge capital: productivity growth as a sustainability policy
14

15. U.S. climate mitigation could benefit water quality –focus on fertilizer use
15
Capital, 38%
Natural gas,
51%
Electricity, 2%
O&M cost,
9%
Cost structure of Ammoniaproduction, %
Capital
Natural gas
Electricity
O&M cost
17 16.2
58.8
19.3
24.1
87.8
18.6
47.8
176.2
0
40
80
120
160
200
Electricity Petroleum products Natural gas
Change in energy prices, %
SCC (51 USD) SCC (76 USD) SCC (152 USD)
30.4
45.3
90.6
0
20
40
60
80
100
Change in ammonia prices, %
SCC (51 USD) SCC (76 USD) SCC (152 USD)
Zuidema, Liu, Chepeliev, Johnson, et al. PNAS, 2023.

16. Carbon pricing
reduces nitrate
export to Gulf
of Mexico as
well as
groundwater
contamination
16
Climate policy leads to improved water quality
Zuidema, Liu, Chepeliev, Johnson, et al. PNAS, 2023.

17. Added benefit of carbon pricing is that it curtails negative spillovers
arising from a spatially limited policy
17
Effect on nitrogen fertilizer applications of coupling wetland restoration with carbon pricing
Wetlands only Wetlands & $51/ton CO2 Wetlands & $152/ton CO2
Zuidema, Liu, Chepeliev, Johnson, et al. PNAS, 2023.

18. Outline of talk (based on workshop questions)
How can models from different disciplines be combined to provide more robust and
comprehensive insights?
Quantifying key drivers behind the triple planetary crisis:
Population change as a driver of biodiversity losses as well as recovery
Global drivers of groundwater depletion in the Western US
Quantifying interactions between climate change and pollution
What are the key biophysical risks of the triple planetary crisis, and how do they
translate to economic outcomes?
Which policies are needed to address climate change, biodiversity loss, and pollution,
and how can modelling efforts quantify the corresponding synergies and trade-offs?
US water pollution and alternative local policies
Investments in knowledge capital: productivity growth as a sustainability policy
18

19. Economic shocks from Ecosystem
Services Dependency models
Land-use change modeling with SEALS (Spatial
Economic Allocation Landscape Simulator)
Currently includes 6 global
ecosystem services
Includes new version of
GTAP-AEZ with 300+
AEZ/Region combinations
Land Supply curves
parameterized for each AEZ
Overview of GTAP-InVEST

20. Baseline land use change to 2030 leads to a degradation of natural capital
which lowers global welfare and disproportionately hurts low-income countries
Johnson et al. PNAS, 2023: https://doi.org/10.1073/pnas.2220401120
Ongoing degradation of nature damages low income
economies most severely (% welfare lost under baseline)

21. Baseline land use change to 2030 leads to a degradation of natural capital which
lowers global welfare and disproportionately hurts low-income countries
Johnson et al. PNAS, 2023: https://doi.org/10.1073/pnas.2220401120
Policies to protect natural capital, including public R&D
for agriculture and payments for ecosystem services
boost global welfare as well as natural capital. Ensuing
gains accrue disproportionately to the lowest income
countries!
Protecting nature benefits the economy:
Greatest gains to low income economies

22. Outline of talk (based on workshop questions)
How can models from different disciplines be combined to provide more robust and
comprehensive insights?
Quantifying key drivers behind the triple planetary crisis:
Population change as a driver of biodiversity losses as well as recovery
Global drivers of groundwater depletion in the Western US
Quantifying interactions between climate change and pollution
What are the key biophysical risks of the triple planetary crisis, and how do they
translate to economic outcomes?
Which policies are needed to address climate change, biodiversity loss, and pollution,
and how can modelling efforts quantify the corresponding synergies and trade-offs?
US water pollution and alternative local policies
Investments in knowledge capital: productivity growth as a sustainability policy
22

23. Yield response
Nitrogen Loss
Coupling SIMPLE-G with an
agro-ecosystem model

24. Nationwideand site-specificnitrate leaching
mitigation strategies
A
Tax
B
Nutrient
management
C
Controlled
drainage
D
Wetland

25. Tax N leaching
Increased frequency of N
applications
Controlled drainage of fields
with subsurface tiles
Wetland restoration
Most effective policy
to limit non- point N
pollution varies by location
Liu et al. ERL, 2023

26. Outline of talk (based on workshop questions)
How can models from different disciplines be combined to provide more robust and
comprehensive insights?
Quantifying key drivers behind the triple planetary crisis:
Population change as a driver of biodiversity losses as well as recovery
Global drivers of groundwater depletion in the Western US
Quantifying interactions between climate change and pollution
What are the key biophysical risks of the triple planetary crisis, and how do they
translate to economic outcomes?
Which policies are needed to address climate change, biodiversity loss, and pollution,
and how can modelling efforts quantify the corresponding synergies and trade-offs?
US water pollution and alternative local policies
Investments in knowledge capital: productivity growth as a sustainability policy
26

27. Doing more with less: Globally, strong empirical evidence that TFP
growth has reduced agricultural land conversion and GHG emissions
TFP =
growth in outputs –
growth in inputs
Source: Fuglie et al. (2022)

28. Where does TFP come from?
Linking TFP growth to R&D
•TFP depends on (own- & spillin-) knowledge capital:
•Knowledge capital accumulates (with a lag) based on
historical investments (it also depreciates over time)
•The productivity of knowledge capital depends on local
conditions (elasticities vary by region)
1/
()
OS
O OO S LL NN
Q AK K Q Q
δδ ρ ρρ
φφ
− −−
= +

29. Much of ag TFP growth can be explained by historical R&D investments
•Nearly all of
TFP growth in
wealthy
economies was
R&D driven:
1990-2011
Source: Fuglie(2018)

30. WHILEPUBLICR&D ISASLOW-MOVINGTRAIN …..
Time
Farm Output Gains (in %)
Years 11- 23
(45% of Gains)
Years 1-5
(<1% of Gains)
Years 6-10
(5% of Gains) Year 24- 42
(44% of Gains)
1950 1960 1970 1980 1990 2000
Output Gains from
U.S. Public Agricultural R&D Investments in Year 1950 *
*Baldos, U. L. C., Viens, F. G., Hertel, T. W., & Fuglie, K. O. (2019). R&D Spending, Knowledge Capital, and Agricultural
Productivity Growth: A Bayesian Approach. Amer. Journal Agri. Econ.

31. Public investments in R&D can generate low cost mitigation as well
as lowering the cost of conservation policies
31
Source: Fuglie et al., AEPP (2022)

32. GLASSNET: An International Network of Networks
taking Land-Grant Ideals to the World
https://glassnet.net