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In recent years, reducing food waste and loss has become a policy priority in the European Union, but little is known about impacts of related measures in the EU and beyond. This study informs the debate on food waste reduction through a quantitative analysis. It considers adjustment costs for reducing food waste in food processing industries and impacts on food availability, pressure on land and water, and other environmental consequences. The results suggest that the leakage effects of global trade may offset almost all benefits of food waste reduction in the EU. We thus conclude that costly efforts to reduce food waste in the EU cannot be motivated by larger contributions to global food availability and environmental benefits. This highlights the need for global coordination of such policies and/or more targeted actions in the EU which focus on specific production chains, where losses can be reduced and environmental gains obtained at a relatively low cost.

Reducing of food waste has become a policy priority in recent years as many studies show that a significant amount of food is wasted in different stages of food supply chain. However, the economic impacts of food waste reduction are not well studied as most of the studies in the literature ignore the costs and feedback effects. The aim of this report is to develop a general framework to analyse the economic impacts of reducing food waste in EU28 both in a global and a regional context, to support the EU policy making process on food waste reduction. For the purposes of this study, we employ the CGEBox toolbox which is a flexible, extendable and modular code basis for CGE modelling. The default configuration of CGEBox that is used in this study covers the global economy with a detailed representation of agriculture and food production sector whereas the EU28 is modelled at NUTS-II level. We simulate food waste reduction in food processing sectors under two different cost assumptions. First, by assuming that the cost of reducing food waste is equal to the monetary savings for the food processing industry; and second, by assuming that the cost of reducing food waste is twice as much as the savings from food waste. The scenarios assume a food waste reduction that is equal to 5% of the intermediate input use of food processing sectors. The results suggest that a unilateral commitment of the EU to reduce food loss and waste would most likely decrease the competitiveness of the EU food processing. Reduced demand for primary agricultural inputs would shrink the EU’s agricultural sectors, pressuring on farm incomes and land prices. The contribution to global food security would be very minor. The impact on emissions relevant for climate change at global level is also minor, with some very limited contribution inside the EU., JRC.D.4-Economics of Agriculture

In this paper we consider some of the economic implications of climate change scenarios as described in the Shared Socioeconomic Pathways (SSPs). By comparing potential water demand with estimates of (sustainable) water availability in different regions, we identify regions that are likely to be constrained in their future economic growth potential by the scarcity of water resources. We assess the macroeconomic impact of water scarcity under alternative allocation rules finding that, by assigning more water to sectors in which it has a higher value, shifting production to less water intensive sectors, and importing more water intensive goods, constrained regions can effectively neutralize these water related climate risks and adapt to a changing water environment. However, this adaptation effort is likely to imply some radical changes in water management policies.

We use a global, computable general equilibrium model to estimate how idiosyncratic, independent shocks to sectoral productivity could bring about variations to real income in a country. Some theories have been elaborated to explain why relatively small sectoral shocks could lead to sizable macroeconomic variability. We process the results of our simula- tion experiments to assess the relative importance of a number of potential explanations, as well as of other factors not accounted for in theoretical models. We find that the variability of the GDP, induced by sectoral shocks, is basically determined by the degree of industrial concentration. We interpret the absence of significant inter-industry propagation effects as a consequence of the fact that, typically, a non-negligible share of in- termediate production factors is imported.

This paper analyzes the qualitative properties of a multisectoral, multiregional computable general equilibrium model where some industries include heterogeneous firms as in Melitz (2003). The model, formulated according to Roson and Oyamada (2014), adds endogenous productivity effects to a standard Walras-Ricardian framework. We argue that the inclusion of such effects changes the magnitude and distribution of welfare benefits obtainable by reductions in trade barriers, due to of comparative advantages. We illustrate the point through a numerical example, in which alternative model formulations are assessed. A standard neoclassic GE model, a basic Melitz model and a hybrid model are then compared. The three model versions are all calibrated with the same data set and an identical simulation experiment (a 50% reduction of transport costs between two regions) is carried out in the three cases. The results show that the hybrid model displays the largest welfare gains, as it combines Ricardian comparative advantages with Melitz average productivity improvements. However, they also show that new effects, not present in the original Ricardo and Melitz frameworks, are at a work.