Abstract
This article analyzes the potential impacts of climate change on agriculture in Mexico using a Ricardian model with panel data. The analysis uses economic data from 2,431 municipalities for the period 2003 to 2009. The study distinguishes between irrigated, rainfed and mixed farms and includes extreme weather events as an additional variable. The results indicate that irrigated farms are more vulnerable to temperature variations, while rainfed farms are more vulnerable to precipitation changes and extreme weather events. The projected impact in net revenue per hectare, considering a temperature rise of 2.5°C and a 10% reduction in precipitation, are between -18.6 and -36.4% of net revenue considering all type of farms. This climate scenario predicts average losses of net revenue ranging from, 26 to 55%; 14 to 25% and 27 to 37% for irrigated, rainfed and mixed municipalities, respectively. Key words: Climate change, agriculture, Latin America, Ricardian model, panel data.
Highlights
Agricultural activities are sensitive to climate conditions and to climate change (Cline, 2007)
The estimated climate elasticities indicate that a 1% increase in temperature will lead to a 3.19% decrease in net revenues for the mixed sample, a 3.47% for irrigated farms and 1.89% for rainfed farms (Table 3)
These results show that irrigated farms are more sensitive to temperature change than rainfed farms
Summary
Agricultural activities are sensitive to climate conditions and to climate change (Cline, 2007). There are already several studies using a RM (Mendelsohn and Dinar, 2009) This approach has been criticized for a number of issues (De Salvo, et al, 2014); for example, for the omission of relevant variables such as the carbon fertilization effect, the effects of price adjustments or the adaptation processes, the irrigation or extreme weather events effects and the structural instability of the estimated coefficients (Dinar and Mendelsohn, 2011). Some of these omitted factors can be incorporated inside the RM framework; in particular the relevance of extreme weather events and irrigation and the analysis of the stability of the coefficients
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