Current Models Distort International Decision-Making
Economic models serve as benchmarks for international negotiations. Who hasn't heard or read that a successful conclusion of the Doha Round would bring several hundred billion dollars of profits to the international community (850 billion dollars invoked in 2004 and 350 billion in 2005)? Such conclusions are reached via economic models, which synthesize and temporally quantify the various and sometimes contradictory effects of an economic measure or policy by simplifying reality. A model thus functions much like a pair of eyeglasses: it must be able to adjust to our specific vision problems (since one does not wear the same pair to see better both close and far away) and the glasses must also be as transparent as possible, since the goal is to gain an accurate and faithful view of reality.
All would be just fine, then, if the models currently being used (World Bank, OECD, FAPRI, etc.) were the right "glasses" for international agricultural negotiations. The problem is that they are not!
Why build the WOAGRI model?
Other models are based on inappropriate, inaccurate and biased assumptions; they distort decisions and are driving agriculture into a dead end, whether in the context of the WTO, the CAP or the global fight against poverty.
These models suppose:
That demand is completely price elastic – in other words, that we would eat twice as much if food cost half as much, which is not only absurd but also an insult to those who are dying of hunger.
That supply automatically adjusts to demand, which is the opposite of the realities observed in agricultural markets and completely cancels out the effects of speculation.
That the world's population can be represented by an average consumer, an assumption that disregards significant differences in living conditions.
That full employment is a given, and that neither transportation and energy costs nor exchange rates need to be taken into account.
In short, these models demonstrate that prices are not volatile and that they tend to stabilize naturally in a completely liberalized world -- and yet the facts point to the contrary!
WOAgri therefore made it a priority to build a model specifically adapted to agriculture - the WOAGRI model. This was all the more urgent in that models are used for more than just decision making; they also shape and direct opinion, since they are used to further specific goals, thereby becoming veritable strategic 'weapons' for influencing the course of international negotiations.
To not speak this language is to not have a voice: let us recall how unprepared European negotiators were for the Uruguay Round, having no model at hand to support their case, whereas the Americans had come armed with solid simulation instruments to defend a widespread well-being indistinct from their own. Europe still does not have an international agricultural model of its own. This is particularly worrisome with CAP reforms and the WTO negotiations underway.
The existence of this "strategic void," coupled with the absurdly oversimplified take on reality of current models, represents a significant threat to the international community and Europe in particular, for agriculture is an economic sector at once specific and strategic.
How was it built?
The WOAGRI model accounts for all of the unique characteristics of agriculture and the related economic, social, energy and environmental variables. It is a general, balanced, calculable model with seven specific, independent yet connected modules that focus on the interactions between agriculture and the major issues facing humanity. These models cover:
Evaluation of endogenous risks and weather hazards
Level of foreign dependency
Effects on poverty
Sustainable development and the future of the planet
Growth and intergenerational effects
How can it effect change?
As the first model designed for a strategic purpose, it will operate according to a philosophy of use inspired by game theory and will be a true decision-making support tool, both for governments and for international institutions. It will also facilitate negotiations, because they will be conducted on a more realistic, transparent basis. Finally, the model will be available in open source (supervised by a scientific committee) so that it can be constantly improved and adapted to the needs of its various users: agricultural organizations, corporations, public authorities and international entities.