Rural Investment and Policy Analysis (RIAPA) Modeling Toolkit James Thurlow Development Strategies and Governance Division, IFPRI Scientific and Technology Partnerships in Africa Technology Assessments and Platforms: Tools and Reach in Africa 19-21 July 2016 / Washington, D.C.

What is RIAPA? Tool developed by IFAD/IFPRI for analyzing the contribution of agricultural investments to broader rural transformation goals Ex ante economy-wide analysis: Estimates impacts on a range of outcomes (e.g., growth, jobs, poverty, food security, nutrition, etc.) Prioritizes between investments (e.g., which crops to target? irrigation vs. improved seed varieties?) RIAPA captures two key considerations for investments: Economy-wide linkages (e.g., spillovers, value-chains, agri-food systems) Macro-micro interactions (e.g., investments → growth → poverty)

Economywide Framework Disaggregates national economy into activities and households in different regions Tracks income and expenditure flows between all economic actors, including the government and rest of world Actors interact in markets to set prices for products and factors Macroeconomic consistency is maintained

Using RIAPA for Value Chain Analysis 1. Characterize the new value chain Identify key stages in the supply chain Estimate labor and other inputs used at each stage (i.e., production costs) 2. Insert new value chain into RIAPA and run expansion simulations Outcome (poverty) Time (planning horizon) Baseline (without value chain) Counterfactual (with value chain) Investment Impact

Example: Biofuels in Malawi Two stage value chain Farming of biofuel feedstock crop (sugarcane) Processing of feedstock into liquid biofuel (ethanol) Transaction costs generate incomes for traders and transporters Stage 1 Feedstock farming Stage 2 Biofuel processing Transport to processing plant Transport to border for export Reference: Schuenemann, Thurlow and Zeller. Leveling the field for biofuels: Comparing the economic and environmental impacts of biofuel and other export crops in Malawi. Forthcoming in Agricultural Economics.

Sugarcane-Ethanol “Technologies” Irrigated outgrowers Rainfed outgrowers Liquid yield (liter/mt) 70.0 Feedstock required (1000 mt) 14,286 Land yield (mt/ha) 99.0 42.0 Land required (ha) 144,000 340,000 Workers employed (people) 53,669 100,634 Feedstock 53,298 100,263 Processing 371 Capital needs (units) 12,142 9,984

Comparing Biofuel and Existing Crops

Simulating Biofuels Expansion Jointly model feedstock and downstream biofuels processing Biofuels sectors start very small and are then expanded by injecting capital Biofuels sectors compete for land and labor resources, and demand intermediate inputs All biofuels are exported Product markets Labor Exports Capital Raw feedstock Agro-processing Trade & transport Land Services Industry Agriculture House-holds Supply Domestic sales Repatriated profits

Headline Results Growth and Poverty Land Use Change

Social Accounting Matrices Countries with known SAM databases GDP Sub-Saharan Africa, 2012 Population Completed Underway Next in line Second wave NEXUS Project (standardization)

Similar Applications Smallholder vs. plantation value-chains (incl. emissions from land use change) Thurlow et al. 2016. Producing Biofuels in Low-Income Countries: An Integrated Climate and Economic Assessment for Tanzania. Environmental and Resource Economics 64(2) : 153-171. New maize varieties and fertilizer use (incl. climate and world price risks) Arndt et al. 2015. The Economywide Impacts and Risks of Malawi’s Farm Input Subsidy Program. American Journal of Agricultural Economics 98 (3): 962-980.