Page - 4 - in options, Volume summer 2015

research news 4 options + summer 2015 www.iiasa.ac.at iiasa research Envisioning the future of  farming In a recent study, Wilfried Winiwarter, a researcher in the Mitigation of Air Pollution and Greenhouse Gases (MAG) Program, explored the possible directions that agricultural innovation might take in the future. “I call this a science fiction paper,” says Winiwarter. “It’s not about what exists and can be implemented immediately, but about the possible innovations that could conceivably be developed in the long term.” Within the next few decades, the world will need to increase food production to support a growing population that is striving for higher shares of animal protein in their nutrition. Food production, however, always affects the environment. To increase food production, without further increasing nitrogen pollution and greenhouse gas emissions, agricultural systems will need to innovate. The new study reviewed existing tech- nical and scientific literature on agricultural innovations. Topics investigated ranged from seemingly simple changes, like increased urban farming and more efficient use of fertilizer and irrigation, to radical techno- logical fixes like genetic modification and culturing artificial meat in a lab. While many detailed aspects of such innovations remain unknown, the available design studies allow researchers to identify the biophysical con- straints inherent to their implementation. “There is no ‘silver bullet’ to resolve the environmental damage of agriculture,” Winiwarter says. Instead, future innovations will need to be carefully monitored and evaluated for potential environmental effects to minimize damage of nitrogen pollution and maintain livelihoods. Read more at blog.iiasa.ac.at. KL Further info Winiwarter W, Leip A, Tuomisto HL, Haastrup P (2014). A European perspective of innovations towards mitigation of nitrogen-related greenhouse gases. Current Opinion in Environmental Sustainability 9–10:37–45 [doi:10.1016/j.cosust.2014.07.006]. Wilfried Winiwarter winiwart@iiasa.ac.at Banking system remains at risk Future collapses in the world’s financial markets are almost certain if steps are not taken to radically rethink the current regulation regime, according to new research. “To design future financial and banking systems to work in such a way that they simply could not collapse would be a major milestone,” IIASA’s Stefan Thurner says. “In this study, we aimed to test whether current worldwide credit regulation methods are a good way of reducing the risk of financial system collapse.” To test the effectiveness of current credit regulation, researchers used a simple agent-based computer model in which banks, investors, and households interacted with each other as if in the real world. “We then imposed the current regulation scheme, known as Basle 11, under which banks are required to hold a capital cushion, into that model and we assessed the likelihood of financial collapse,” Thurner explains. The researchers found that even when operating under optimal circumstances, the Basle framework could not ensure systemic stability. Thurner says, “Indeed, we found that greater regulation sometimes even increases risk. Counterintuitively, our message is that tighter Basle-type regulation creates more risk than would have existed with no regulation at all.” Thurner and colleagues have also proposed entirely new regulations to manage systemic risk. “We believe that regulation has to focus on the structure of financial networks, and we have shown how this can be done with a systemic risk transaction tax. Our  proposal is currently under debate by central bankers and decision makers in several countries.” JO Further info Poledna S, Thurner S, Farmer JD, Geanakoplos J (2014). Leverage-induced systemic risk under Basle II and other credit risk policies. Journal  of Banking & Finance 42:199–212 [doi:10.1016/j.jbankfin.2014.01.038]. Stefan Thurner thurner@iiasa.ac.at