Climate Change Economics

This special issue examines the impact of climate on agriculture as well as the economics of farmer adaptation in South-East Asia. An extensive survey was undertaken of small farmers in Bangladesh, Indonesia, Mongolia, Sri Lanka, Thailand and Vietnam. Ricardian studies were undertaken to measure the likely impact of climate change on these farmers. Adaptation studies were undertaken to measure how farmers would likely change their behavior (choices) as climate changed. Perceptions were asked to gauge farmer awareness of climate change and their plans to adapt. The overall study provides many useful analyses into the climate sensitivity of agriculture in the region as well as how farmers might adapt to climate changes.

This paper examines the impact of climate change on the net revenue (NR) of farmers from Bangladesh, Indonesia, Sri Lanka, Thailand and Vietnam. Two Ricardian models are estimated: (1) a traditional Ricardian model of the impact of climate change on annual farm NR and (2) a structural Ricardian model that first estimates the number of growing seasons and then the net revenue per season. The traditional model reveals annual NR is sensitive to autumn and summer climate variables. The seasonal effects offset each other so that uniform marginal effects are insignificant. Future climate scenarios likely harm Sri Lanka but could either benefit or harm Indonesia depending on the climate scenario. The structural Ricardian model suggests climate change will reduce the net revenue of three-season farms and increase the revenue of one-season farms causing farmers to switch from three-season farming to one-season farming. Expected losses by 2100 for the region range from $-$10% to $-$18%. Impacts in Indonesia may be higher ranging from $-$20% to $-$28%.

Bangladesh, Sri Lanka, Thailand, and Vietnam each conducted a Ricardian analysis of crop net revenue (NR) in their country. The countries defined seasons slightly differently depending on their monsoon and dry periods. They also sometimes included slightly different variables in their regressions. The countries are small so that the climate results are often insignificant. However, the Ricardian model does predict near term damage in Bangladesh in the CanESM climate scenario and near and far term damage in Thailand in the CMCC climate scenario.

We examine the potential for farmers in South-East Asia to adapt to climate change using a survey of farmers from Bangladesh, Indonesia, Sri Lanka, Thailand, and Vietnam. We model farmers’ current choices using cross-sectional analysis. We test the climate sensitivity of when to plant, which crop to plant, whether to irrigate, and how much inputs to use. We find that all these choices are sensitive to climate in this region. Farmers are likely to adapt to future climate change by growing more rice and oilseed crops, planting more often from November through March, and relying more heavily on ground water irrigation for water short seasons.

This paper explores how southeast Asia farmers adapt to climate change. We develop three models: a logit model of livestock choice, an OLS model of total livestock value, and a multinomial logit model of species choice. The data were collected from five countries in Southeast Asia. We find that climate has a significant impact on farmers’ livestock choice. We use three climate projections to predict future impacts. Climate change would increase the probability of raising livestock. However, the total value of livestock owned per livestock farm will shrink 9%–10%. Climate change will cause farmers to choose smaller animals such as ducks, goats, and chicken rather than larger animals.

This study conducts cross-sectional analysis to investigate impact of climate change on livestock sector in Mongolia using data gathered from a household survey and aggregate soum (district) level data. The soum-level analysis reveals the marginal effect of precipitation has a positive effect on livestock/ha up to 26mm/mo and thereafter a harmful effect. The marginal effect of warming on livestock/ha is not significant until annual temperatures exceed 0.4${}^{\circ }$C whereupon warming is strictly harmful. The household-level analysis suggests warming will decrease earnings per animal while overall earnings per household increases with a small change in climate but declines with larger changes. However, the household data also suggests warming would increase the total value of livestock. The results of the different analyses are therefore conflicting suggesting one or more of the analyses are plagued by missing variables.

A survey of farmers in Bangladesh, Indonesia, Sri Lanka, Thailand, and Vietnam reveals that farmers are keenly aware of even slight changes in their climate. Over 90% of the farmers interviewed perceived small changes in temperature or precipitation patterns where they lived. Over half claimed to have changed their irrigation, timing, or crop choices because of climate change. Although the link between perceived changes and stated adaptations is weak, farmers are aware of the types of changes they need to make in response to climate change in South-East Asia. Adaptation responses must be firmly grounded in not only local conditions, but also the views of participants at the front lines of climate change impacts. The knowledge base of farmers grappling with the challenges of climate change must be taken into account when policy responses to support adaptation are formulated.

This study finds that South-East Asian farming is sensitive to climate change. Traditional Ricardian studies at the country and regional levels reveal that net revenue is affected by seasonal climate. A structural Ricardian model of growing season choice reveals climate change will reduce net revenues in the near term by 4–8% and in the long term by 10–18%. The implications of this impact on key sustainable development goals such as poverty reduction is likely to be profound. The study finds that farmers who rely on cultivating in three seasons will be especially hard hit by climate change relative to those that rely only on a single season. The results indicate that farmers will switch from 3 seasons to 1 season per year and reduce some of the losses that they would otherwise sustain. An analysis of crop adaptation finds that farmers will also adjust irrigation, crop choice, and the timing of planting in response to climate change. The livestock adaptation study finds that farmers will move towards livestock as climate warms. Farmers will also shift their choice of species away from large animals and move towards small animals. An analysis of perceptions finds that farmers throughout the region are aware that temperature is rising and they generally perceive that precipitation is falling. Half of the farmers interviewed have begun to take measures such as those reported in this study to adapt to climate change. The overall results suggest that acting on their self-interest, the agriculture sector will undertake a great deal of adaptation on its own. However, measures taken by the government such as providing up-to-date weather reports, extension, irrigation and assistance with new varieties can also be effective.