Economic implications of climate change: evidence from agricultural productivity

Abstract

The increased frequency and severity of drought episodes have characterised the natural environment of the Sahel region in Africa during the past four decades. With little to no mitigation option available to them, countries of the Sahel will face a further deterioration of their economic environment, as an ill-agricultural sector will most likely drag down their whole economies. This paper uses a six-month standardised precipitation index and average temperature during the growing season days to quantify the adverse impacts of climate change on agricultural productivity. I first estimate a Malmquist productivity index and its efficiency and technical change components. I further assess the statistical significance of the indices by estimating confidence intervals around the point estimates using a bootstrap method. In the second stage of the analysis, I model the adverse effects of drought and temperature on agricultural productivity using a probit specification. The findings of this paper point to a dismal agricultural productivity. These findings also highlight the significant cumulative negative impacts of higher temperatures and recurrent droughts on agricultural-based economies.