Economic Impact of Climate Change on the Malaysian Palm Oil Production

Abstract

The purpose of the study is to investigate the economic impact of climate change on paddy production in Malaysia. This study employs a modified Ricardian model in assessing the impacts of climate change on productivity of crops. The impact of changes in temperature and rainfall during the period of 31 years (1980 to 2010) on productivity of paddy production was successfully determined through time-series regression analysis based on annual crop production. The PRECIS Regional Climate Modelling System was applied to estimate the potential impact of paddy net revenue due to long-term changes in climate. The result shows that temperature and rainfall had significant negative impact on paddy production. Based on the findings of this study, some adaptation and mitigation strategies are suggested to be implemented in order to minimize the adverse effects of climate change on paddy production.