Cornelius Hirsch: Digging into foreign investment in agriculture

By Parul Tewari, IIASA Science Communication Fellow 2017

Two things are distinctly noticeable when you meet Cornelius Hirsch—a cheerful smile that rarely leaves his face and the spark in his eyes as he talks about issues close to his heart. The range is quite broad though—from politics and economics to electronic music.

Cornelius Hirsch

After finishing high school, Hirsch decided to travel and explore the world. This paid off quite well. It was during his travels, encompassing Hong Kong, New Zealand, and California, that Hirsch started taking a keen interest in economic and political systems. This sparked his curiosity and helped him decide that he wanted to take up economics for higher studies. Therefore, after completing his masters in agricultural economics, Hirsch applied for a position as a research associate at the Austrian Institute of Economic Research and enrolled in the PhD-program of the Vienna University of Economics and Business to study trade, globalization, and its impact on rural areas. Currently, he is looking at subsidies and tariffs for farmers and the agricultural sector at a global scale.

As part of the 2017 Young Scientists Summer Program at IIASA, Hirsch is digging a little deeper to analyze how foreign direct investments (FDI) in agricultural land operate. “Since 2000, the number of foreign land acquisitions have been growing—governmental or private players buy a lot of land in different countries to produce crops. I was interested in knowing why there are so many of these hotspots in the world— sub-Saharan Africa, Papua New Guinea, Indonesia—why are people investing in these areas?,” says Hirsch.

Farming in one of the large agricultural areas in Indonesia ©CIFOR I Flickr

Increased food demand from a growing world population is leading to an increased rate of investment in agriculture in regions with large stretches of fertile land. That these regions are largely rain-fed make them even more attractive for investors as they save the cost of expensive irrigation services. In fact, Hirsch argues that “the term land-grabbing is misleading. It should actually be water-grabbing as water is the foremost deciding factor—even more important than simply land abundance.”

Some researchers have found an interesting contrast between FDI in traditional sectors, such as manufacturing, and the ones in agricultural land. While investors in the former look for stable institutions and good governmental efficiency, FDI in land deals seems to target regions with less stable institutions. This positive relationship between corruption and FDI is completely counterintuitive. Hirsch says that one reason could be that “sometimes weaker institutions are easier to get through when it comes to such vast amount of lands. A lot of times these deals and contracts are oral and have no written proof—the contracts are not transparent anyway.”

For example in South Sudan, the land and soil conditions seem to be so good that investors aren’t deterred despite conflicts due to corrupt practices or inefficient government agencies.

One of the indigenous communities in Madagascar, a place which is vulnerable to land acquisitions © IamNotUnique I Flickr

One area that often goes unnoticed is the violation of land rights of indigenous communities. If a government body decides to sell land or give out production licenses to investors for leasing the land without consulting the actual community, it is only much later that the affected community finds out that their land has been given away. Left with no land and hence no source of livelihood, these communities are forced to migrate to urban areas.

A strain of concern enters his voice as Hirsch talks about the impact. “Land as big as two times the area of Ecuador has been sold off in the past—but it accounts for a tiny percentage of the global production area.” With rising incomes and greater consumption of meat, a lot of land is used to produce animal feed crops. “This is a very inefficient way of using land,” he says.

During the summer program at IIASA, Hirsch is generating data that will help him look at these deals in detail and analyze the main factors that are taken into consideration before finalizing a land deal. At the moment he is only able to give an overview of land-grabbing at the global level. With more data on the location of the deals he can look at the factors that influence these decisions in the first place such as the proximity between the two countries involved in agricultural investments and the size of their economies.

While there is always huge media coverage when a scandal about these land acquisitions comes out in the open, Hirsch seems determined to dig deeper and uncover the dynamics involved.

About the researcher
Cornelius Hirsch is a research associate at the Austrian Institute of Economics and Research (WIFO). At IIASA he is working under the supervision of Tamas Krisztin and Linda See in the Ecosystems Services and Management Program (ESM).

This article gives the views of the author, and not the position of the Nexus blog, nor of the International Institute for Applied Systems Analysis.

The carbon curse: Can countries that produce fossil fuels ever get close to a low-carbon economy?

By Katya Perez Guzman, IIASA CONACYT postdoctoral fellow in the Advanced Systems Analysis Program

Extractivism, a mode of economic growth currently practiced by many developing countries, is the phenomenon of extracting natural resources from the Earth to sell as raw materials on the world market. It is a central cause of many environmental problems, such as deforestation, loss of habitat and biodiversity, water, soil, and air pollution. Any study of these topics is therefore incomplete if it does not take this model of development into account.

Climate change is no exception, and it is my goal at IIASA to investigate the links between extractivism and climate change mitigation policies for Mexico. To start this search, it is relevant to ask whether the drivers of CO2 emissions might be different in countries that practice extractivism to those that do not. During my PhD, which examined the basic drivers of CO2 emissions in Mexico as a fossil fuel producer and exporter, I suggested that the answer is yes.

Even when there are as many causes of CO2 emissions as there are economic activities, CO2 emissions can be linked to four main drivers: population, GDP per person, the energy use per unit of GDP, and the CO2 emitted by each unit of energy consumed. The greater the value of these variables, and the faster their growth, the more CO2 emissions (all other things being equal). These four factors can then be incorporated into a model known as the Kaya identity, which aims to explain CO2 emissions at a global level.

Deforestation in Malaysia. © Rich Carey | Shutterstock

For fossil fuel producers and exporters, these four elements of the Kaya identity may vary in idiosyncratic patterns across various periods, for example during booms and busts. There is a possible positive relationship between oil abundance and increased population growth, namely because of increased migration to oil production sites. For GDP per capita, a phenomenon known as the natural resource curse describes how production and export of fossil fuels can harm economic growth in the long term, although this debate is still not settled. Alongside this, various analyses have linked fossil fuel production with higher energy consumption, especially during boom times.

Lastly, a proposed carbon curse relates higher abundance of fossil fuels to higher “carbon intensity”—the amount of CO2 emissions per unit of GDP. The carbon curse may be a result of four mechanisms. First, the predominance of a fossil fuel production sector which emits a lot of CO2 itself. Second, crowding out effects in the energy generation sector, forming a barrier to newer renewable energy sources. Third, crowding out effects in other sectors of the economy—a phenomenon known as the “Dutch Disease” because when the Netherlands discovered its Groningen gas field in 1959 the economic boom that followed the gas exports resulted in a decline in manufacturing and agriculture. Finally, less investment in energy efficiency technologies and more subsidies for national fossil fuel consumption can also bring on the carbon curse.

It is therefore crucial to account for the links between extractivism and climate change related topics: for mitigation, but just as importantly for vulnerability and adaptation. If the past can be used to shape the future, a measure of the carbon curse could help national and international policymakers to determine how close an oil-extractive economy can get to being a low carbon economy.

This article gives the views of the author, and not the position of the Nexus blog, nor of the International Institute for Applied Systems Analysis.

Natural regeneration for sustainable development

By Alvaro Silva Iribarrem, researcher in the IIASA Ecosystems Services and Management Program.   

Restoration of degraded ecosystems is an exciting and relatively new way of looking into the conservation of natural capital—the world’s natural assets, including soil, air, water, and all living things. For one, the success of restoration is more readily verifiable than, for example, avoided degradation. Further, it increases the landscape’s resilience: natural areas can be placed around agricultural crops, increasing their yields by providing habitat for pollinators and therefore increasing pollination, protecting them from natural disasters, and improving the provision of important ecosystem services for human wellbeing.

These services include removing CO2 from the atmosphere (which contributes directly to climate change mitigation); ensuring that more sediment is filtered from the rivers (which reduces the risk of landslides and floods); and providing habitat for a large diversity of species. For scientists, it feels like being at the head of the counter-offensive: it is us, humans, finally doing something not only to slow our seemingly unstoppable degradation of the environment, but to actively start pushing it back.

Restoring an ecosystem to its original state can be an expensive endeavor, but tropical rainforests are very resilient. For example, even after centuries of extensive use of the Brazilian Atlantic Forest, which has been reduced to a tenth of its size, in many places it would still grow back to much of its original state in a manner of decades, if allowed to do so. For such ecosystems, natural regeneration represents an extraordinary opportunity to enable restoration at scales that would otherwise be cost-prohibitive.

In places like the Paraitinga watershed, in the countryside of São Paulo state, most of the original forest has long been cleared, and replaced, predominantly, by small dairy farms. After over a century of careless land use, large areas of the converted landscape has degraded to the point where yields are so low that farms are barely viable. The lack of forest cover has led to frequent floods. The worst of the recent ones, in 2010, destroyed most of the historical city of São Luiz do Paraitinga, with a population of 11 thousand inhabitants.

The 2010 flood in Paraitinga. © Luciano Dinamarco

The aftermath of the 2010 flood in Paraitinga. © Luciano Dinamarco

In a couple of recent publications, we made a comprehensive effort to include the natural regeneration of that watershed’s native forest as part of a bigger plan for more sustainable development of the region, one that would increase its resilience to this kind of disaster.

Starting from a landscape approach, we looked at the potential for grass growth in the region, and concluded that it was possible to accommodate all foreseeable future demands for cattle production and still make space for the restoration of a large area in the watershed. Sustainable intensification of current pasture is key to avoid the economic losses that could otherwise follow the land shortage caused by such a large-scale restoration. It would also help to gain the farmers’ acceptance. By producing more in a smaller area, they could let go of the degraded areas they currently use, allowing the native forest fragments nearby to spread.

In our regeneration scenario, we assume that around 24,000 hectares of pastureland that is presently abandoned in the watershed will be allowed to undergo natural regeneration in the next 20 years. This naturally occurring forest regrowth would sequester 6.2 million tons of CO2 from the atmosphere. Additionally, it would reduce sediment load into rivers by 570,000 tons annually, bringing water purification costs in the area down by 0.37 dollars per year per hectare restored. Finally we showed that restoration of even this relatively small area would be enough to significantly increase habitat availability for all species, particularly for those which travel between forest fragments.

To understand the difficulties farmers face in improving productivity, we conducted interviews and focus groups with them. We found that the tendency to keep to their old, low-producing, land-extensive ways, is less related to a resistance to change, and more to a lack of technical knowledge and the means to make the upfront investments needed to switch to a more productive system. Credit for investment is available and cheap in the country, but only a small number of farmers in the region risk taking it. Technical assistance is key to tap into these resources and enable the necessary improvement of the watershed’s production. The conditions for unlocking large-scale forest regrowth, not only in the Paraitinga watershed but in many similar landscapes in the country, are in place—they need only to be implemented properly.

Strassburg BB, Barros FS, Crouzeilles R, Silva Iribarrem, A, dos Santos JS, Silva D, Sansevero JB, Alves-Pinto H, Feltrain-Barbieri R, & Latawiec AE (2016). The role of natural regeneration to ecosystem services provision and habitat availability: a case study in the Brazilian Atlantic Forest. Biotropics. 

Alves-Pinto HN, Latawiec AE, Strassburg BBN, Barros FSM, Sansevero JBB, Iribarrem A, Crouzeilles R, Lemgruber LC, Rangel M, & Silva ACP (2016). Reconciling rural development and ecological restoration: Strategies and policy recommendations for the Brazilian Atlantic Forest. Land Use Policy.

This article gives the views of the author, and not the position of the Nexus blog, nor of the International Institute for Applied Systems Analysis.

Modeling forest fires: a burning issue

By Andrey Krasovskii, IIASA Ecosystems Services and Management Program

By 2090, the area burned by forest fires in the European Union could increase by 200% because of climate change.  However, preventive fires could keep that increase to below 50%. Improved firefighting response could provide additional protection against forest fires. These findings were the result of modeling work we did for the EU Mediation project  on projecting future burned areas and adaptation options in Europe.  When we talk about these results, people often want to know more about how our model works, what assumptions it makes, and how reliable it is.

 

Figure 1. The WildFire cLimate impacts and Adaptation Model (FLAM) schematic – estimation of expected burned area.

Figure 1. The WildFire cLimate impacts and Adaptation Model (FLAM) schematic – estimation of expected burned area.

The model is complex: every link in the schematic shown above represents a specific mathematical formula. These formulas have been developed by many researchers who studied how wildfire occurrence is related to climate, population, and biomass available for burning. Their results have been aggregated into mathematical relations and functions attempting to replicate real processes. The model code runs through the scheme with daily weather inputs in order to calculate the potential for fire ignition, spread, and burned areas. The model transforms spatial and intertemporal inputs into expected burned areas for 25km squares across the entirety of Europe. These squares can be summed up into geographic regions, e.g. countries, as well as burned areas can be aggregated over a given time period, e.g. 10 years.

It took days for our colleague Mirco Migliavacca to run the model during his work at the Joint Research Center of the European Commission. In fact, the scheme depicted in Figure 1 shows only a small piece of a larger picture reflecting the Community Land Model with the integrated fire module (CLM-AB), which he used. CLM-AB calculates all inputs in the indicated fire module, based on modeling processes in the global vegetation system. To speed up the running times for the case study focused on the wildfires in Europe, my colleague Nikolay Khabarov developed a standalone version of the fire model by decoupling the fire module from CLM-AB. When I joined the study, we had also found alternatives for input data, e.g. IIASA’s Global Forest Database, and implemented additional procedures in order to create our wildfire climate impacts and adaptation model (FLAM).

We used the historical data from satellite observations in order to validate modeling results. At the beginning many numerical experiments in CLM and FLAM did not give satisfactory results – there was either overestimation or underestimation of modeled burned areas compared to those reported in available datasets. One day a purely mathematical insight happened. We realized that in the fire algorithm implemented in FLAM, there is a parameter that can be factorized, mathematically speaking. This parameter, a probability of extinguishing a fire in a pixel in one day, was constant for Europe and set to 0.5. It became obvious that this parameter should vary with respect to a region. Factorization of this variable gave a possibility to avoid routine calculations, and use it for calibrating the model over a historical period. This can be done analytically by solving a corresponding polynomial equation. Analytical findings allowed us to introduce an effective calibration procedure and at the same time to estimate a firefighting efficiency on a country level. Further, using the advice of our colleagues Anatoly Shvidenko and Dmitry Schepaschenko, we have introduced adaptation options in the model, for example prescribed burnings, which firefighters use to reduce the fuel availability and, consequently, potential of a major fire.

(cc) US Bureau of Land Management

Prescribed burnings are one tool that can help prevent major wildfires. (cc) US Bureau of Land Management via Flickr

Once we had calibrated the model so that it adequately performed on the historical period (using historical climate data), we used climate scenarios to produce future projections. Currently, we are working on further improvements in modeling accuracy in annual burned areas by introducing additional regionally specific factors in the model. In the recent study published in the International Journal of Wildland Fire, we suggested improving the original model by modifying the fire probability function reflecting fuel moisture. This modification allows for a dramatic improvement of accuracy in modelled burned areas for a range of European countries.

Despite some success in modeling annual burned areas in Europe, we still have difficulties in predicting the extreme fires, in particular in some more arid and hence vulnerable regions such as Spain. However, we accept the challenge, because credible modeling results in terms of burned areas provide important information for assessing economic damages and CO2 emissions, due to climate and human activities. Our research has the potential to help society to realize these risks and undertake preventive measures. It also delivers an additional scientific value due to the fact, that fire risks must be included in forest management models.

I would like to thank all the study co-authors for their valuable contributions and efficient collaboration.

Reference
Krasovskii, A., Khabarov, N., Migliavacca, M., Kraxner, F. and Obersteiner, M. (2016) Regional aspects of modelling burned areas in Europe. International Journal of Wildland Fire. http://dx.doi.org/10.1071/WF15012 

Note: This article gives the views of the interviewee, and not the position of the Nexus blog, nor of the International Institute for Applied Systems Analysis.

Climate change, bioenergy, and ozone in the EU

By Carlijn Hendriks, Netherlands Organization for Applied Scientific Research (TNO) & IIASA Peccei award winner

Last summer, I participated in IIASA’s Young Scientist Summer Program, working with the Mitigation of Air Pollution and Greenhouse Gases and Ecosystems Services and Management programs. My research focused on what impacts the EU climate and air quality policy could have on ground level ozone around the middle of this century. While clean air policies should help reduce the pollution that can lead to ozone formation, we found that that climate change and energy policies will still increase ozone concentrations and damage by mid-century, unless stricter air pollution measures are implemented.

Ozone forms through reactions of various pollutants - a process that speeds up at higher temperatures. © Damián Bakarcic via Flickr

Ozone forms through reactions of various pollutants and chemicals in the atmosphere – a process that speeds up at higher temperatures. © Damián Bakarcic via Flickr

Ozone at ground level is an air pollutant, causing health and ecosystem problems. It is also an important component of summer smog. Ozone is not emitted into the atmosphere directly, but is produced when volatile organic carbons are oxidized in the presence of  nitrogen oxides and light. Nitrogen oxides are released into the atmosphere mainly as a result of combustion processes (like car engines and industry), while non-methane volatile organic carbons (NMVOCs)  come in large part from vegetation, especially broad-leaf trees and some fast-growing crops.

Part of the EU energy policy is to stimulate the use of sustainable biomass as an energy source. This could lead to expansion of commercial bioenergy crop production in plantations and an increasing use of  forests. While this may help to reduce greenhouse gas emissions, it will also increase NMVOC emissions. At the same time, EU air quality policies aim to reduce emissions of air pollutants such as nitrogen oxides and man-made NMVOC. Because some steps in the ground level ozone formation process are driven by absorption of light and/or proceed faster with higher temperatures, climate change could lead to higher ground level ozone concentrations in the future.

The separate effects of these three trends on ground level ozone have been studied before, but the question remains: what will be the combined impact of a) an increase of bioenergy plantations, b) EU’s air quality policy and c) climate change on health and ecosystem damage from ground level ozone? And which of the trends is the most important? To answer these questions, I used three models to study two energy and air quality scenarios for Europe under current and possible future climate conditions.

Two energy scenarios calculated by the Price-Induced Market Equilibrium System (PRIMES) model form the basis of this work. We used a reference scenario and one in which Europe reaches 80% CO2 emission reduction in 2050. These energy scenarios were used as a basis to calculate air pollutant emissions with IIASA’s  Greenhouse Gas and Air Pollution Interactions and Synergies (GAINS) model. Then we put the same scenarios into IIASA’s Global Biosphere Model GLOBIOM to obtain the change in land cover because of increasing bioenergy demand. I combined these datasets in chemistry transport model LOTOS-EUROS (the model of choice at my home institute, TNO) to calculate the impact on ground level ozone concentrations across Europe. To simulate ‘future climate’ we used the year 2003, in which Europe had a very warm summer, with temperatures 2-5 °C higher than normal.

Difference in average ozone concentration (in µg/m3) between the current situation and the 80% CO2 reduction scenario in 2050 under future climate change conditions for the period April-September. Negative numbers mean a decrease in ozone levels.

Difference in average ozone concentration (in µg/m3) between the current situation and the 80% CO2 reduction scenario in 2050 under future climate change conditions for the period April-September. Negative numbers mean a decrease in ozone levels.

We found that especially for the CO2-reduction scenario, the increase in bioenergy production could cause a slight increase in ozone damage. However, the impact of reduced emissions because of more stringent air quality policies far outweighs this effect, leading to a net reduction of ozone damage. The third effect, more efficient ozone formation in a warming climate, is so strong that in 2050 ozone damage to human health could be worse than today, especially for northwestern Europe. Stringent air quality policies close to a maximum feasible reduction scenario would be needed to make sure that health and ecosystem damage towards the middle of the century is smaller than it is today.

Note: This article gives the views of the author, and not the position of the Nexus blog, nor of the International Institute for Applied Systems Analysis.

Scientific decision support systems: One step beyond bridging science to policy

By Ping Yowargana, IIASA Ecosystems Services and Management Program

Recently, Indonesia has been combating its most severe forest fire of the decade. Around 43 million Indonesians have been exposed to hazardous fumes, and countless loss of biodiversity and ecosystem services has occurred. An estimated 1 billion tonnes of carbon emission has been released to the atmosphere. Within three months, Indonesia’s daily carbon emission has surpassed the average daily emissions of the whole US economy.

Firefighters outside Palangka Raya, Central Kalimantan, 15 October 2015.  Photo by Aulia Erlangga/ CIFOR

Firefighters outside Palangka Raya, Central Kalimantan, 15 October 2015.
Photo by Aulia Erlangga/ CIFOR

Forest fires in Indonesia are closely related to unsustainable agricultural practices spreading out throughout the country. Indonesia is the world’s largest producer of palm oil, with 8 million hectares of plantation area. Other than its significant contribution to the economy, and broadly debated effects on the environment, oil palm is also regarded as a promising solution to the country’s effort to achieve energy security. The current administration has set ambitious targets to increase national biofuel production, and to consume it domestically.

In this landscape of uncertainty and crisis, scientific support for Indonesian energy policy is more urgently needed than ever. That’s why it is one of our main focuses in the IIASA Tropical Forests Initiative (TFI).

“Scientific authority has to be the basis of our future energy policies,” said Mr. Sudirman Said, Indonesia’s Minister of Energy and Mineral Resources, at the opening session of our first collaborative screening workshop in September in Bandung, Java. In the workshop, jointly organized by IIASA and the ministry, we aimed at laying out a plan to establish a new decision support system for the ministry, based on IIASA’s energy systems models such as the renewable energy systems optimization model, BeWhere and the Model for Energy Supply Strategy Alternatives and their General Environmental Impact (MESSAGE).

Scientific decision support systems (DSS) are a tangible crystallization of bridging science to policy. A decision support system gathers information and analytical expertise in order to improve the quality of policy making, using feedback and evaluation from previous planning and policy implementation. As a practical approach in dealing with what scientists refer as complex adaptive systems, such DSS should be able to integrate visions of long-term planning with technical details that are important for daily executed policies.

The IIASA and the Ministry of Energy and Mineral Resources of Indonesia screening workshop took place from 15-17 September. ©MEMR

The IIASA and the Ministry of Energy and Mineral Resources of Indonesia screening workshop took place from 15-17 September. ©MEMR

Indonesia’s energy sector is a typical example of a highly complex system. Currently, challenges of the sector are more cross-sectoral than ever. Issues that seem to have limited scopes, such as bioenergy, actually influence a broad swath of other areas including agriculture, land use change, air pollution, climate change and social equity.

For that reason, the approach we brought to the recent meeting relies on multiple models. BeWhere brings a snapshot perspective to explore energy supply options that best meet the objective set by policy makers, such as cost efficiency or least CO2 emissions, based on location specific energy demand, resource and infrastructure availability. On the other hand, MESSAGE brings a more macroscopic perspective, looking at various scenarios that project optimal solutions of meeting long-term energy demand in a certain region or country.

To have a truly systems perspective, the above approach cannot stand alone. Before we started looking at Indonesia’s energy sector, we had engaged local researchers in the tropics to localize IIASA’s Gobal Biosphere Management Model (GLOBIOM). GLOBIOM is used to analyze the competition for land use between agriculture, forestry, and bioenergy, which are the main land-based production sectors. Clearly, investigating further into the energy system will allow us to grasp a more holistic understanding and develop solutions to tackle challenges in tropical countries.

As one of IIASA’s pilot countries in the budding TFI, Indonesia represents conflicting realities of the tropics, which are essential to the planet’s well-being. Tropical forests help regulate the Earth’s climate system, while being home to huge biodiversity, millions of plant and animal species. However, the region is also highly challenged by domestic development needs and the growing consequences of a globalized economy. Abundant natural resources and land-intensive agricultural commodities, together with intensified infiltration of global supply chains and complicated socio-economic structures, have resulted in severe ecological pressures that are harmful to the region as well as the planet.

The TFI aspires to address such complexity by applying systems analysis together with regional policymakers. Such application implies a two-fold challenge. The first one is to put together IIASA’s various scientific tools to understand the broader picture that comes out from the integration of interrelated aspects of domestic development. Secondly, working together with policymakers leads to a mutual learning process. Policymakers learn to use scientific models and tools in their decision making process. In this process, fitting the models into the local context is an inevitable step that requires intense communication between scientist and practitioners. Eventually, this process will also benefit researchers by giving them a better understanding of the issue, and opening opportunities for further scientific investigation on new topics.

Note: This article gives the views of the author, and not the position of the Nexus blog, nor of the International Institute for Applied Systems Analysis.