Climate is changing in Corn Belt where crops are sensitive to heat What is driving the increased variability RFS binding at the end of 2008 Validation 3: Economic model

Climate is changing in Corn Belt where crops are sensitive to heat What is driving the increased variability RFS binding at the end of 2008 Validation 3: Economic model www.phwiki.com

Climate is changing in Corn Belt where crops are sensitive to heat What is driving the increased variability RFS binding at the end of 2008 Validation 3: Economic model

Thomas, Darla, Operations Manager has reference to this Academic Journal, PHwiki organized this Journal Implications of Climate Extremes as long as US Corn Prices Under Alternative Economic in addition to Energy ScenariosPresented by Thomas Hertel, Purdue University Based on joint work with Noah Diffenbaugh, Martin Scherer, in addition to Monika Verma Stan as long as d University Presentation to the Department of Agricultural Economics, Purdue University, October 16, 2012 Based in part on a paper published in Nature Climate Change, April 23, 2012Exploring the climate-agriculture-markets-energy policy nexusAgricultural production depends on climate Frequency in addition to Intensity of extreme events is anticipated to increase in the futureCrops are sensitive to climate extremes, but these can be quite localizedCapitalize on recent high resolution climate results as long as continental USCombine with estimated yield function as long as maize in USIntegrate within economic model to assess market impacts

Lake Erie College US www.phwiki.com

This Particular University is Related to this Particular Journal

Exploring the climate-agriculture-markets-energy policy nexusAgricultural production depends on climate Frequency in addition to Intensity of extreme events is anticipated to increase in the future Crops are sensitive to climate extremes, but these can be quite localizedCapitalize on recent high resolution climate results as long as the USCombine with estimated yield function as long as maize in USIntegrate within economic model to assess interplay with energy policies/energy futuresClimate Model Supports Hypothesis of Increased Extreme EventsRegional Climate Model as long as USA (RegCM3) nested in Global Climate Model (CCSM3)High resolution (25km)A1B Scenario as long as GHG as long as cingFive (physically uni as long as m) realizations: difference between the realizations arises due to internal climate system variabilityAverage results across five realizations in keeping with best practice in climate scienceCompare:1980-2000 (historic climate) to 2020-2040 (future climate)Climate is changing in Corn Belt where crops are sensitive to heat GDD below 29C rise in Northern regions; improves growing conditionsPrecipitation changesless pronouncedGDD above 29C rise sharplythroughout Corn Belt; leads to drop in yields

Exploring the climate-agriculture-markets-energy policy nexusAgricultural production depends on climate Frequency in addition to Intensity of extreme events is anticipated to increase in the future Crops are sensitive to climate extremes, but these effects can be quite localizedCapitalize on recent high resolution climate results as long as the USCombine with estimated yield function as long as maize in USIntegrate within economic model to assess interplay with energy policies/energy futuresTemperature Sensitivity of Yields is KeyClimate variability translates into increased year-on-year yield volatility:US Corn Yield Response to Temp Schlenker in addition to Roberts, PNAS, 2009Std deviation of yield ratio rises in future climate Historic climate Future climate Ratio: Future/Historic Std DevWhat is driving the increased variability9% change in st in addition to ard deviation of weighted individual drivers of YR

Combine county yield ratios with national production weights to get national ratio10Production weightsValidation 1: The combination of high resolution climate results with the Schlenker-Roberts yield regression per as long as ms well vs. historyAs with economics – micro-theory works better at the macro-level!The variability (SD) of the national yield ratio doubles under future climate with historic yield function (will evaluate changes in yield function later on)

Validation 2: What does this framework predict as long as the current crop year (2012)Results produced by Schlenker in addition to Roberts in addition to presented at NBER meetings in August, revised in September using weather data up to August 31Based on cumulative heat in addition to precipitation indexes; applied at county levelFollowing slides come from their paper2012 was warm early: this is a good thing as long as getting into the fields earlier: Days under 29C = Good HeatSource: Berry, Schlenker in addition to Roberts, NBER, 2012After which it becomes a bad thing if it leads to excessive heat during critical stages of crop development: Days over 29C = Excess HeatSource: Berry, Schlenker in addition to Roberts, NBER, 2012

The excess heat was made much worse by the drought: Cumulative PrecipitationSource: Berry, Schlenker in addition to Roberts, NBER, 2012Decline in National Yields depends on model specification (BSR, 2012) Predicted production impacts, by county15% with simpler yield model used by us (see above)20% BRS when adjust growing season24% BRS when effect of heat is allowed to vary over the growing seasonLatest estimates suggest a decline of 24.7%17Source: Berry, Schlenker in addition to Roberts, 2012Exploring the climate-agriculture-markets-energy policy nexusAgricultural production depends on climate Frequency in addition to Intensity of extreme events is anticipated to increase in the future Crops are sensitive to climate extremes, but these can be quite localizedCapitalize on recent high resolution climate results as long as the USCombine with estimated yield function as long as maize in USIntegrate within economic model to assess interplay with energy policies/energy futures

The biofuel boom in addition to high oil prices altered the l in addition to scapePrior to 2006 growth in ethanol dem in addition to from use as an oxygenator; not linked to energy: Corn-crude price correlation 2001/07 = 0.32After 2006 this was satiated, leaving ethanol with just the energy substitution marginHigh oil prices from Sept. 2007 – Oct. 2008 encouraged significant substitution at this margin; further expansion of ethanol production with corn prices rising to choke off excess profits: Corn-crude price correlation: 2007/08 = 0.92The correlation between corn in addition to oil prices was strong in the high price regime of 2007/0820So oil prices matter, but they are uncertain

Policies in addition to institutional constraints matter as long as market price transmissionBlend wall is currently serious issue – expect this to be relaxed over next decadeRefinery flexibility is another key issue (see Abbott, NBER, 2012)Renewable Fuel St in addition to ard (RFS) represents a lower bound constraint on productionBinding at end of 2008 when oil price fell, permitting separation of oil in addition to corn prices, with RINs attaining positive valuesCorn-crude price correlation: 2008/09 = 0.56RFS binding at the end of 2008The inter-annual price response to commodity supply volatility depends on interplay between oil prices in addition to RFSS’High Oil Prices (assuming blend wall is relaxed by 2020) more elastic corn dem in addition to due to price-responsive sales to liquid fuel marketLow Oil Prices Inelastic corn dem in addition to as ethanol production is dictated by policies instead of markets

Thomas, Darla KMXZ-FM Operations Manager www.phwiki.com

Validation 3: Economic modelGTAP-BIO-AEZ extensively used to examine biofuels policy & energy linkagesFocus is on price volatility, yet benefits manyValidate this in three ways:Historical simulation from 2001-2008: compare to obs changesStochastic simulation off 2008 base:Use historic yield volatility: 1990-2009 (base period matters – Higher volatility in earlier period.)Seek to reproduce historic price volatilityActual SD year-on-year price changes was 28%Simulated value is 25%; very close to actual when add energy price volatility- Reproduce 2012 drought: 20% yield reduction (as of early August) gives 50% price rise; comparable to observation at the time impact (assumes pre-drought expected price of $5.26/bu)Economic Model ScenariosWe combine 5 alternative economic scenarios with historic in addition to future climates1) Economy in 20012) Economy in 2020 with High Oil Prices in addition to a. RFS m in addition to ate (corn ethanol only) in place (15bgy not initially binding) b. RFS m in addition to ate waived3) Economy in 2020 with Low Oil Prices a. RFS m in addition to ate in place ((corn ethanol only: 15bgy binding in 2020) b. RFS m in addition to ate waived, but only in 202026Impact of corn supply shocks on US corn price volatility across climate regime, under two energy futures: No Adaptation (st in addition to ard deviation in inter-annual % price change)Future climate doubles yield volatility, quadruples price volatilityPrice volatility dampened under economic growth, high oil prices due to integration of agr, energy markets (higher sales share to ethanol)27Simulations with GTAP-BIO-AEZ Model

Impact of corn supply shocks on US corn price volatility across climate regime, under two energy futures: : No Adaptation (st in addition to ard deviation in inter-annual % price change) When add m in addition to ate, sensitivity to future climate is exacerbated (factor of 5.3 under binding m in addition to ate – shaded bars), even though not initially binding in 2020, high oil price scenario28Simulations with GTAP-BIO-AEZ ModelImpact of corn supply shocks on US corn price volatility across climate regime, under two energy futures: : No Adaptation (st in addition to ard deviation in inter-annual % price change) Under low oil future,price volatility is evenhigher, particularly incontext of m in addition to ate, which is binding in 2020 benchmark29Simulations with GTAP-BIO-AEZ ModelSummary of economic integration in addition to adaptation Intersectoral integration:Market driven (e.g. higher energy prices)Policy driven (RFS)International integration:Partial: fix tariffs at currently applied ratesEliminate tariffs: full trade liberalizationNormalized St in addition to ard Deviation of US Corn price relative to Baseline Case (=1)-0.270.53-0.07-0.08Adaptation wedges under future climate: metric = SD of year on year corn price changesin 2020

What about the recent decrease in yield volatilityRed dots confirm diminished volatility Blue dots show model’s ability to pick up this effectIn fact, over-predict reduction, possibly due to:Increased temperature sensitivity of cropsChanges in omitted sources of variationSo our model is fully consistent with recent lessening of volatility;This is not inconsistent with increasing volatility in the future: It’s all about climate!43Volatility diminishedOver-prediction once againThe Blend Wall is also importantBlend Wall (BW): constraint on max usageIn theory it is now 15% of 135 billion gallons of gasoline consumption; however, the effective blend limit is much lower due to infrastructure limitations, including old auto stock; there as long as e bindingAt BW: capacity > market absorption in addition to ethanol price falls to breakeven: ‘warm shutdown’ of production facilitiesIn future economy (2020), assume that the blend wall is no longer a constraint due to turnover in auto stock, predominance of E-15 gasoline with more flex-fuel (E-85) vehicles as well

Thomas, Darla Operations Manager

Thomas, Darla is from United States and they belong to KMXZ-FM and they are from  Tucson, United States got related to this Particular Journal. and Thomas, Darla deal with the subjects like Music

Journal Ratings by Lake Erie College

This Particular Journal got reviewed and rated by Lake Erie College and short form of this particular Institution is US and gave this Journal an Excellent Rating.