Assessing farm innovations and responses to policies: A review of bio-economic farm models

Bio-economic farm models (BEFMs) are developed to enable assessment of policy changes and technological innovations, for specific categories of farming systems. A rapidly growing number of research projects is using these models and there is increasing interest for application. The paper critically reviews past publications and applications of BEFMs on their strengths and weaknesses in assessing technological innovation and policy changes for farmers and policy makers and highlights key issues that require more attention in the use and methodology of BEFMs. A BEFM is defined as a model that links formulations describing farmers' resource management decisions to formulations that represent current and alternative production possibilities in terms of required inputs to achieve certain outputs, both yield and environmental effects. Mechanistic BEFMs are based on available theory and knowledge of farm processes and these were the focus of our study. Forty-eight applications of mechanistic BEFMs were reviewed as to their incorporation of farmer decision making and agricultural activities, comprehensiveness, model evaluation, and transferability. A clear description of end-use of the BEFM, agricultural activities, model equations and model evaluation are identified as good practices and a research agenda is proposed including the following issues: 1. development of a thorough and consistent procedure for model evaluation; 2. better understanding and modelling of farmer decision making and possible effects of the social milieu; 3. inclusion of several economic and environmental aspects of farming including multifunctionality and 4. development of a generic, modular and easily transferable BEFM. (c) 2007 Elsevier Ltd. All rights reserved.