Assessing the economic implications of climate change impacts on the Paraguayan agricultural sector

Abstract

ABSTRACT Developing countries are especially vulnerable to climate change, as they often depend on agriculture and have less adaptation possibilities. The present paper assesses the economic implications of climate change in Paraguay, by incorporating projected crop productivity impacts due to climate change in a global multi-region and multi-sector general equilibrium model. The results suggest that despite projected decreases in crop productivity Paraguayan production and exports of wheat and soybeans may increase because of climatic changes, and lead to increased household income and welfare in Paraguay. This is because the projected decreases in crop productivity are generally larger in other regions than in Paraguay, giving the competitive advantage, allowing Paraguay to increase their share on global and regional soybean, wheat, and rice markets. Although these results seem promising for Paraguay, it highlighted the need for future improvements in estimating climate impact on crops at regional and global levels considering integrated agricultural and economic models.