Ricardian analysis of climate change–agriculture linkages in Pakistan

Abstract

ABSTRACTClimate change has now become a universal truth. Its impact on agriculture is a growing concern in the world today. Being third most vulnerable country to climate change, agrarian economy of Pakistan seems to be at stake. The increasing threat of global warming is also on the way. To this end, a pioneering research work was conducted to trace climate change–agriculture linkages through Ricardian regression by employing gridded data sets of climatic variables. Economic valuation as articulated through spatial autoregressive specification revealed that climate change has significantly decreased Net Farm Revenues (NFRs) in irrigated and rain-fed regions. However, farmers in the irrigated region were found to be the acute sufferer of climate change which implicitly shows the imbalance in the stock of irrigation water. Estimated threshold levels for mean temperature and diurnal temperature were quantified to be 19.17°C and 13.88°C. Results indicate that on an overall basis, every increase in mean temperature significantly decreased NFRs per hectare by Rs. 8556 (US $70). But in the irrigated region, every increase in mean temperature significantly decreased NFRs per hectare by Rs 30,705 (US $256). The nonsignificant decrease in the rain-fed region could not be proved statistically. It was further estimated that increase in diurnal temperature significantly reduced NFRs by Rs. 2401 (US $20) in Pakistan, Rs. 9635 (US $80) in the irrigated region and Rs. 8834 (US $74) in the rain-fed region. The study suggested a mixed farming system as an adaptation measure in all kinds of settings while cooperative farming was identified for the rain-fed region. Similarly, updated agriculture services through various capacity building programmes particularly about climate resilient researches and rural literacy programmes may help in developing sustainable agriculture in Pakistan.