Abstract
This chapter presents a Spatial Equilibrium Model (SEM) for analyzing the spatial patterns of agricultural supply, demand, trade and pricing in Costa Rica. The behavioral relations of producers and consumers are modeled, while simultaneously taking transaction costs and government policies into account. The SEM maps 17 major agricultural commodities across six planning regions and the rest-of-the-world, considered as a seventh region. The model is validated with 1995 data, and its results are used to assess spatial patterns of land use, trade flows and social welfare. The model’s simulations show the potential effects of trade liberalization, changes in transport costs, technological progress in agriculture, and economic growth. Trade liberalization leads to increased welfare, mainly due to a rise in the consumer surplus resulting from lower import prices. Reductions in transport costs also have a positive welfare effect, as a result of increased domestic trade, more specialized regional production, and a growth in exports. Technological progress in agricultural production lowers unit production costs, and mainly favors production of export products, whose relative competitiveness is enhanced. Finally, economic growth increases domestic demand, leading to increased imports, fewer exports and a slightly enlarged domestic production. The study shows that on the basis of reliable data and sound econometric analysis, an agricultural sector model can be developed that both policy makers and research institutions could use to evaluate the effectiveness of alternative agricultural policy measures.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
References
Examples include Martin and Zwart (1975), Pieri et al (1977) and Krishnaiah and Krishnamoorthy (1988).
While this is true even for coffee, Costa Rica’s share in the total world exports of banana is about 15%, making export demand for Costa Rican bananas less than infinitely elastic. Nevertheless, for simplicity’s sake, an infinitely elastic demand in the world market was also assumed for banana. In contrast, export demand for banana is considered to be inelastic in Chapter 7.
In the calculation of production values, all production was valued against regional commodity producer prices.
The outcomes of the scenarios depend on the set of export and import prices used. As world market prices fluctuate considerably, the results of trade liberalization scenarios will depend on these prices. However, though different world market prices would lead to different results, welfare effects can be expected to show similar tendencies.
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2000 Springer Science+Business Media Dordrecht
About this chapter
Cite this chapter
Roebeling, P.C., Jansen, H.G.P., Van Tilburg, A., Schipper, R.A. (2000). Spatial equilibrium modeling for evaluating inter-regional trade flows, land use and agricultural policy. In: Bouman, B.A.M., Jansen, H.G.P., Schipper, R.A., Hengsdijk, H., Nieuwenhuyse, A. (eds) Tools for Land Use Analysis on Different Scales. System Approaches for Sustainable Agriculture Development. Springer, Dordrecht. https://doi.org/10.1007/978-94-010-9024-7_4
Download citation
DOI: https://doi.org/10.1007/978-94-010-9024-7_4
Publisher Name: Springer, Dordrecht
Print ISBN: 978-0-7923-6480-1
Online ISBN: 978-94-010-9024-7
eBook Packages: Springer Book Archive