PESETA III: Agro-economic analysis of climate change impacts in Europe

Abstract

This report presents the agro-economic analysis within the PESETA III project, focusing on the effects of climate change on crop yields and related impacts on EU agricultural production, trade, prices, consumption, income, and welfare. For this purpose the CAPRI modelling system was employed, using a combination of a Shared Socioeconomic Pathway (SSP2) and a Representative Concentration Pathway (RCP8.5). For the climate change related EU-wide biophysical yield shocks, input of the agricultural biophysical modelling of the PESETA III project was used, which provided crop yield changes under water-limited conditions based on high-resolution bias-corrected EURO-CORDEX regional climate models, taking also gridded soil data into account. As agricultural markets are globally connected via world commodity trade, it is important for the agro-economic analysis to also consider climate change related yield effects outside the EU. The analysis, therefore, was complemented with biophysical yield shocks in non-EU countries as provided by the AgCLIM50 project. To simulate and assess the response of key economic variables to the changes in EU and non-EU biophysical crop yields, one reference scenario (without yield shocks) and two specific climate change scenarios were constructed, one scenario with yield shocks but without enhanced CO2 fertilization and another scenario with yield shocks under the assumption of enhanced CO2 fertilization. The projection horizon for the scenarios is 2050.