Climate Change and Agriculture: An Economic Analysis of Global Impacts, Adaptation and Distributional Effects

255 Pages·2009·9.46 MB·English

by  Robert O. Mendelsohn

Climate Change and Agriculture
NEW HORIZONS IN ENVIRONMENTAL ECONOMICS
Series Editors: Wallace E. Oates, Professor of Economics, University of Maryland, College
Park and University Fellow, Resources for the Future, USA and Henk Folmer, Professor
of Research Methodology, Groningen University and Professor of General Economics,
Wageningen University, The Netherlands
This important series is designed to make a signifi cant contribution to the development
of the principles and practices of environmental economics. It includes both theoretical
and empirical work. International in scope, it addresses issues of current and future
concern in both East and West and in developed and developing countries.
The main purpose of the series is to create a forum for the publication of high quality
work and to show how economic analysis can make a contribution to understanding and
resolving the environmental problems confronting the world in the twenty-fi rst century.
Recent titles in the series include:
Economic Modelling of Climate Change and Energy Policies
Carlos de Miguel, Xavier Labandeira and Baltasar Manzano
The Economics of Global Environmental Change
International Cooperation for Sustainability
Edited by Mario Cogoy and Karl W. Steininger
Redesigning Environmental Valuation
Mixing Methods within Stated Preference Techniques
Neil A. Powe
Economic Valuation of River Systems
Edited by Fred J. Hitzhusen
Scarcity, Entitlements and the Economics of Water in Developing Countries
P.B. Anand
Technological Change and Environmental Policy
A Study of Depletion in the Oil and Gas Industry
Shunsuke Managi
Environmental Governance and Decentralisation
Edited by Albert Breton, Giorgio Brosio, Silvana Dalmazzone and Giovanna Garrone
Choice Experiments Informing Environmental Policy
A European Perspective
Edited by Ekin Birol and Phoebe Koundouri
Markets for Carbon and Power Pricing in Europe
Theoretical Issues and Empirical Analyses
Edited by Francesco Gullì
Climate Change and Agriculture
An Economic Analysis of Global Impacts, Adaptation and Distributional Eff ects
Robert Mendelsohn and Ariel Dinar
Distributional Impacts of Climate Change and Disasters
Concepts and Cases
Edited by Matthias Ruth and María E. Ibarrarán
Governing the Environment
Salient Institutional Issues
Edited by Albert Breton, Giorgio Brosio, Silvana Dalmazzone and Giovanna Garrone
Climate Change and
Agriculture
An Economic Analysis of Global Impacts,
Adaptation and Distributional Eff ects
Robert Mendelsohn
Yale University, USA
and
Ariel Dinar
University of California, Riverside and (during the preparation
of this book) World Bank, USA
NEW HORIZONS IN ENVIRONMENTAL ECONOMICS
Edward Elgar
Cheltenham, UK • Northampton, MA, USA
© World Bank 2009
All rights reserved. No part of this publication may be reproduced, stored
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Edward Elgar Publishing, Inc.
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A catalogue record for this book
is available from the British Library
Library of Congress Control Number: 2009930434
ISBN 978 1 84720 670 1
Printed and bound by MPG Books Group, UK
Contents
About the authors vi
Acknowledgements vii
1 Introduction 1
2 The role of climate in agricultural production 10
3 Literature review of economic impacts of climate
change on agriculture 32
4 The Ricardian method 54
5 Modeling adaptation to climate change 65
6 Structural Ricardian models 77
7 Ricardian analyses of aggregate data 84
8 Ricardian models of individual farms 100
9 Adaptation studies 151
10 Structural Ricardian studies 175
11 Summary of results 211
12 Policy implications and future research needs 220
Index 233
v
About the authors
Robert Mendelsohn is the Edwin Weyerhaeuser Davis Professor in the
School of Forestry and Environmental Studies at Yale University, USA.
His research focuses on valuing the environment including air pollution
emissions, hazardous waste pollution, wildlife populations, recreation, oil
spills, timber, and non-timber forest products. For the last 15 years, Dr
Mendelsohn has been measuring the impacts of climate change around the
world. He has been involved in studies on agriculture, water, energy, sea
level rise and forestry. Dr Mendelsohn has also been especially interested
in how society will adapt to future changes in climate.
Ariel Dinar is a Professor of Environmental Economics and Policy, and
Director of the Water Science and Policy Center, University of California,
Riverside, USA. This book was prepared while he was Lead Economist of
the Development Research Group at the World Bank, USA. His research
focuses on international water and cooperation, approaches to stable
water allocation agreements, water and climate change, climate change
and agriculture, economics of water quantity/quality, and economic
aspects of policy interventions and institutional reforms.
vi
Acknowledgements
This book compiles work that has been conducted in research funded
by the World Bank around the world in the past 15 years. We would
like to thank the World Bank Research Committee, The Knowledge for
Change Program (KCP), and the Global Environmental Facility (GEF)
for funding the various research projects that led to this book. We bow in
recognition of the enormous eff orts made in data collection and the dedi-
cation of the country teams in Africa and Latin America which allowed us
to undertake the analysis that forms the basis of this book. We would like
to thank The Centre for Environmental Economics and Policy in Africa
(CEEPA) and PROCISUR for their coordination of the country work in
Africa and South America. This book could not have been written without
the hard work of Apurva Sanghi, Pradeep Kurukulasuriya and Niggol
Seo, all former Ph.D. Students at Yale who found climate change and
agriculture to be the focus not only of their Ph.D. thesis, but also of their
future careers. Special appreciation is due to Polly Means and Emanuele
Massetti for their work on producing the maps that feature in the book.
And fi nally, we benefi ted from very useful comments from Richard Adams
and Lewis Ziska.
vii

1. Introduction
This book examines the impact of climate change on agriculture and
what farmers do to adapt to climate. Agriculture and grazing currently
occupy 40 percent of the earth’s land surface (Easterling and Aggarwal et
al., 2007). Overall, agriculture is responsible for 6 percent of the world’s
GDP. In many developing countries, agriculture is a primary sector of
the economy and is the primary source of livelihood for about 70 percent
of the rural population (Easterling and Aggarwal et al., 2007). Climate
changes are expected to aff ect farmers throughout the world. This book
examines the magnitude of the impacts to farmers, where these impacts
will occur, and how farmers can adapt.
Although climate change is expected to have many impacts on various
sectors, few sectors are as important as agriculture. If future climate
scenarios lead to a widespread reduction in food supply, there could be
massive problems with hunger and starvation (Rosenzweig and Parry,
1994; Reilly, 1996). Global analyses of the total impacts of rising green-
house gases have consistently raised concerns about agricultural impacts
(Cline, 1992; Pearce et al., 1996; Reilly et al., 1996; Gitay et al., 2001;
Easterling and Aggarwal et al., 2007). Virtually all developed countries are
concerned about whether climate change will damage their agricultural
sectors. However, several authors are concerned that agricultural losses
will be especially harmful to developing countries (Pearce et al., 1996;
Rosenzweig and Parry, 1994; Mendelsohn and Williams, 2004; Cline,
2007).
CLIMATE CHANGE
In order to understand climate impacts, it is fi rst necessary to discuss
climate change itself. It is now widely agreed that changes in land use and
especially burning fossil fuels have already caused and will continue to
cause substantial releases of greenhouse gases into the atmosphere (IPCC,
2007). These emissions stay in the atmosphere for long periods of time
so that the concentrations of greenhouse gases have been rising steadily
(IPCC, 2007). As greenhouse gas concentrations rise, they are expected to
trap heat in the lower atmosphere. This excess heat is expected to warm
1