# Factor Cost Module (38_factor_costs)¶

## Description¶

This module provides crop-specific, regional production costs for the overall cost minimization function covering costs such as capital, labor and fertilizer. By assigning costs to the production it is affecting the choice of a production pattern by the model. It passes information to the modules core, presolve, yields and livestock and receives information from the crop module.

## Interfaces¶

### Input¶

Name Description Unit A B C
$fm\_tau1995(i)$ Land use intensities for 1995 - x x x
$vm\_yld(j,kcr,w)$ Yields tDM/ha x x x
$vm\_area(j,kcr,w)$ Production area mio. ha x x x
$vm\_tau(i)$ Agricultural land use technology intensity - x x x

The last columns of the table indicate the usage in the different realizations (numbered with capital letters)

 $vm\_cost\_prod(i, kcr)$ The regional production costs for each crop activity mio. USvm\_mi(i)$Management intensity - ### Interface plot¶ Figure 0: Information exchange among modules. ## Realizations¶ ### Preprocessing¶ All module realizations rely on the input$f38\_fac\_req(kcr,w)$, that contains global crop specific and irrigation specific factor requirement costs per ton. This input is calculated by R scripts that can be found in http://subversion/svn/magpie/tools/factor_requirements  This folder also includes a documentation/README.txt that explains the procedure. ### (A) fixed_per_ton¶ This realization receives information from the modules crop (vm_area) and yield (vm_yield). This implementation is similar the implementation old, except that production costs are not related to the area but the production of a cell$vm\_area(j,kcr,w)\cdot vm\_yld(j,kcr,w)$. This means that in this implementation factor costs purely depend on the total production, giving no incentive to concentrate production on high-productive cells. vm\_cost\_prod(i,kcr)= \sum_{i,j,w}vm\_area(j,kcr,w)\cdot vm\_yld(j,kcr,w)\cdot f38\_fac\_req(kcr,w) \cdot f38\_cost\_correct(i,kcr) Limitations The realization assumes that within a region factor costs purely depend on the production and are independent of the area under production. Cases in which the area under production significantly effect factors costs are not covered. ### (B) old (default)¶ This realization receives information from the modules crop (vm_area) and tc (vm_tau). The production costs are calculated by multiplying the production area with an average of a regional crop-specific yield level scaled with regional agricultural land use intensities$\tauand global, crop-specific costs per ton. The incentive to reduce production area and to produce in the most productive areas is provided by including the area in the equation. As the production costs in this realization do not depend on the cellular yields, production costs per area are the same for all cells within a regions no matter whether they are high- or low-productive, giving a high incentive to concentrate production on high-produtive cells. Through the inclusion of the regional average yield level in the cost function, production costs per ton are relatively high for regions with a high yield level, while regions with a low crop-specific yield level profit from lower production costs. \begin{align} vm\_cost\_prod(i,kcr) = \sum_{i,j,w}vm\_area(j,kcr,w)\cdot f38\_yld\_fao(i,kcr)\cdot \frac{vm\_tau(i)}{fm\_tau1995(i)} \cdot f38\_fac\_req(kcr,w) \cdot f38\_cost\_correct(i,kcr)) \end{align} Limitations The realization assumes that within a region factor costs purely depend on the area and are independent of the productivity level within a cell. Cases in which the cellular productivity level significantly effect factors costs per area, are not covered. ### (C) subsidy¶ With this implementation it is possible to change the costs of agricultural production exogenously and specifically for certain clusters. The costs can be changed relatively, absolutely, per hectar or per ton. This implementation can be used in order to implement subsidies on different regional levels or to simulate policy driven enhancing of production costs. Its structure is based initially on the "old" realization sharing its benefits and pitfalls. vm\_cost\_prod(i,kcr) = \sum_{i,j,w}vm\_area(j,kcr,w)\cdot f38\_yld\_fao(i,kcr) \cdot \frac{vm\_tau(i)}{fm\_tau1995(i)} \cdot f38\_fac\_req(kcr,w) \\ -(ic38\_subsidy\_ha\_abs(j,kcr) \cdot vm\_area(j,kcr,w)) \\ -(ic38\_subsidy\_ton\_abs(j,kcr) \cdot vm\_area(j,kcr,w) \cdot f38\_yld\_fao(i,kcr)) \\ -(ic38\_subsidy\_ha\_rel(j,kcr) \cdot f38\_fac\_req(kcr,w) \cdot vm\_area(j,kcr,w)) \\ -(ic38\_subsidy\_ton\_rel(j,kcr) \cdot f38\_fac\_req(kcr,w) \cdot vm\_area(j,kcr,w) \cdot f38\_yld\_fao(i,kcr)) \\ \cdot f38\_cost\_correct(i,kcr) Limitations In order to use this implementation it is necessary to create a file with costs which includes information for every cluster actually used in this run. The realization assumes that within a region non-subsidy related factor costs purely depend on the area and are independent of the productivity level within a cell. Cases in which the cellular productivity level significantly effect non-subsidy factor costs per area, are not covered. ## Definitions¶ Name Description Unit A B Cf38\_yld\_fao(i,kcr)$Regional yields tDM/ ha x x x$f38\_fac\_req(kcr,w)$Factor requirements US$04/tDM x x x
$f38\_cost\_correct(i,kcr)$ Reduction of factor requirements for bioenergy - x x x
$ic38\_subsidy\_ton\_abs(j,kcr)$ Subsidies for the crop production per ton US$2004/tDM x$ic38\_subsidy\_ton\_rel(j,kcr)$Subsidies for the crop production per ton - x$ic38\_subsidy\_ha\_abs(j,kcr)$Subsidies for the crop production per ha US$2004/ha x
$ic38\_subsidy\_ha\_rel(j,kcr)$ Subsidies for the crop production per ha - x

The last columns of the table indicate the usage in the different realizations (numbered with capital letters)

## Developer(s)¶

Anne Biewald, Benjamin Bodirsky, Christoph Schmitz, Jan Philipp Dietrich