ASIA FISH MODELING:

Projection For Fish Supply & Demand in Indonesia    

Hermanto Indonesian Center For Agriculture Socio Economics and Policy

Studies, Ministry of Agriculture

Discussion :

Technical Workshop Asia Fish Model Indonesia IPB International Convention Center Botani Square

Bogor, 29 April 2015 ,

INTRODUCTION

•  Asia Fish Model is as a tool that is useful for analyzing of policies and exogenous shocks on the fisheries sector.

•  It is a multi-market model that explicitly incorporates the interaction of producers, consumers and foreign actors in the domestic market of a country.

•  The model has been applied to nine countries in Asia; namely, Bangladesh, China, India, Indonesia, Malaysia, Philippine, Sri Lanka, Thailand and Vietnam

•  The research question is how future fish supply and demand scenarios look like for Indonesia

Review

•  Multi-market models sometimes referred as “limited general

equilibrium or “multi-market partial equilibrium” models

•  Multi-market models focuses on several markets which are assumed to be strongly interlinked, either on the demand or the supply side

•  Multi-market models involve a system of equations representing a sub-set of the economy. In this contexs the model is divided into producer, consumer and trade cores.

•  Modeler may not want to consider the entire economy and how the macro-level balances occur at the level of national accounts (like CGE models) such as the balance on savings and investment, supply and demand of foreign exchange, etc

Review •  The methodologies presented are commonly used when the

analysis is done “ex ante”, or before the actual implementation of the interventions (issue identification and agenda setting, and policy formulation and assessment)

•  Models should be able to support policy analysis before and after implementation

•  It is essential to know what problem needs to be analyzed and solved before developing a model.

•  In the case of Asia Fish model, it is important to know what are the specific impacts, or need to be estimated and evaluated to inform policymaking.

Review

•  Household types or regional disaggregation should be included in the

multi-market model. What the appropriate level of disaggregation to household types and regions have to be decided.

•  Result may be sensitive to data quality and availability. It is important to be done sensitivity analysis by re-run the policy experiments with a variety of values.

•  The model should be able to link with household survey data to estimate the impact on welfare of households at the household survey level.

Review •  In partial approaches changes in economic welfare are only

measured in the affected market, e.g. losses due to reduced production and consumption and to increased prices.

•  In Asia Fish Model – Indonesia ; how to measure changes in producer and consumer surplus resulting from exogenous supply or demand shifts in multi-market models (the welfare impact )

•  Models have included economic accounts. However, models can not able to estimate household incomes, income distribution

•  Models should be able to incorporate the key drivers of competiveness (at the sectoral and/or national level) to evaluate international trade and competitiveness beyond national and regional boundaries.

Review The following criteria need to be considered : •  Data needs/intensity: Is the model heavily reliant on data? Could the

model incorporate qualitative variables, and could equations (relations among variables) be developed even in the absence or lack of data?

•  Transparency: Is the model transparent or a “black box”, meaning that its source code (i.e. equations) can be easily accessed and understood? How long would it take to develop the knowledge and skills to create the model and/or understand its results?

•  Time horizon of the analysis: Does the model capture short-, medium- and/or long-term impacts of policy interventions? Short term projections are generally more valuable for informing the budgeting process (carried out on an annual basis), while medium- and longer-term projections contribute more effectively to the

Review

•  Support in the policymaking process: Is the model able to support various stages of the policymaking process? If so, could it be employed throughout the cycle to ensure continued use? Can the model be easily institutionalized and owned locally?

•  Effort for maintenance and use: How frequently should the model be updated? How long would it take to update the model? For how long would simulations remain valid (assuming no structural changes)? Is funding available for regular maintenance and updates, as well as for capacity- building on model creation and use?

•  Connecting the model: how the outputs of one model can inform a different kind of model

Elasticities

Elasticities

Suggestion

The MM does not include cross price elasticities

Consider other types of production functions

The use of export elasticities as supply elasticities was not justified

Conduct explicit supplemental analysis on significance of export market

Levels of Sectoral Aggregation

Suggestion Too many sectors, which can make interpretation of results challenging

If modeler wanted to examine the effects of a particular regulation, modeler could build a model that focuses on the markets that will be most strongly affected by the regulation.

Market Structure

Suggestion Evaluate role of imperfect competition, or other variance from perfect competition, when sufficient data is available to do so

Could use the MM and compare results to a model with a few markets where imperfect competition is known to exist

Surplus or Welfare Measures

Suggestion If an intervention in one market were to increase employment in another, the increase in employment in the other market generates welfare gains that are not captured in the surplus measure from the intervened-in market

Include a representation of labor supply and demand.

Conclusion

•  The  main  criteria  considered  in  the  models  is  the  capability  of  models  to  represent  the  social,  economic  and  environmental  dimensions  of  the  problems,  as  well  as  their  capability  to  carry  out  policy  analysis    

•  Integra:ng  and/or  linking  different  modelling  approaches  and  models  is  o>en  required  for  the  types  of  complex  ques:ons  

•  Need  to  es:mate  impacts  across  sectors  for  the  short,  medium  and  longer  term,  with  considering  direct,  indirect  and  induced  impacts  of  interven:on.