NA - Modelling risks in the salmon industry and markets

The project proposes developing a trade model for salmon to assist in discussions and negotiations of current international salmon trade issues and major risks problems facing the salmon industry. Two modeling approaches are discussed either: 1) developin g a traditional equilibrium trade model designed to maximize total welfare across all model regions by solving for a medium-term price that balances the amount of salmon supplied by world region to the amount processed and consumed by world region, or 2) developing an econometric stochastic simulation model based on linear or non-linear equations. Some disadvantages and weaknesses of the programming model are discussed whereas the econometric model would need further exploration and consideration. The mai n use of the models will be to study effects of problems related to market interventions, transportation and competition in different exporting, processing or consuming regions. A middle ground option to be considered is to start by building a very simpl e two country elasticity displacement model (Norway and the rest of the world) as a prototype to demonstrate the method. This would be useful also because one will have to identify most all elasticities for the model and force one to find them or what dat a would be required. In the process one will find out what would be required to support the development of a multiple country model. During the project a study tours of about one week will be conducted by Dr. James W. Richardson to NILF and another to Te xas A&M University for Dr. Leif Jarle Asheim. The exchange of researchers are considered an important effort to improve the bilateral research cooperation between Texas A & M University and NILF needed to develop the model.