Economic Impact of Climate Change on Agriculture: A Study of India and its Neighbouring Countries Using ARDL Approach

Abstract

This study aims to analyze the association between the share of agriculture in GDP and changes in climatic variables, notably per capita CO2 emissions and temperature change, using time series data of India, Bangladesh, and Nepal for the period 1961-2018. The ARDL bounds testing method was applied to analyze the relationships among the research variables for both short-term and long-term. The results revealed that in the long run, per capita CO2 emissions and temperature change have no statistically significant relationship with India and Nepal’s share of agriculture in GDP. However, temperature change has demonstrated a positive and statistically significant relationship with the share of agriculture in Bangladesh’s GDP. Temperature change has a significant and adverse impact on the share of agriculture in India’s GDP in the short run, whereas CO2 has no significant effect. In the short run, CO2 shows a positive and significant connection with the share of agriculture in Bangladesh’s GDP. Still, temperature change is negatively and significantly associated with the proportion of agriculture in the nation’s GDP. Different lag values of both CO2 and temperature change have significant relationships with the share of GDP in agriculture in the short run in Nepal. As agriculture is a key source of GDP for all three countries, it is vital to implement suitable policies and make plans and strategies to mitigate climate change’s harmful consequences in agriculture.