Sustainable Development: Rural Poverty and Climate Change in Agriculture

Abstract

How to achieve sustainable development is an important issue all over the world. In 2015, all United Nations Member States adopted the 17 Sustainable Development Goals (SDGs) as a universal action to ensure social, economic, and environmental sustainability. Notably, rural poverty and climate change are the most significant challenges for the agricultural economy and rural development as it relates to the basic living needs of rural households and agricultural production activities. Therefore, this dissertation aims to better understand rural poverty and the impact of climate change on agriculture so as to provide some theoretical and empirical evidence for policy-making. Concerning the rural poverty and climate change issues, this dissertation sheds light on three topics: poverty and subjective poverty in rural China, disagreement on sunspots and soybeans futures prices, and the impact of climate change on agricultural trade in Central Asia. Each topic is studied both theoretically and empirically. The first topic uses a subjective measure approach to reveal the subjective poverty in rural China and then employs several econometric models to analyze the determinants of subjective poverty. We collect a nationally representative sample of 2025 households to conduct the research. Our results indicate that the mean subjective poverty line of the rural households is 8297 yuan per capita, which is far higher than the national poverty line (2800 yuan). Statistically, 29% of the surveyed rural households who are not objectively poor feel subjectively poor. Thus, we conclude that the objective poverty line cannot fully reflect the subjective poverty perception. The second topic analyzes the impact of sunspots on the volatility of soybeans futures prices in a framework of the disagreement theory. Empirically, we use the monthly time series datasets of soybeans futures prices and sunspot activities from 1988-2018 to investigate how sunspots affect the volatilities of soybeans futures price by estimating the GARCH, GJR-GARCH, and Markov-switching GARCH models. Our findings can be summarized as (1) extremely low sunspot activity could lead to both a high level and high volatility for soybeans futures price; and (2) when considering regime changes, the disagreement level is nonlinear in the high volatility regime in which the high price volatility exists on both extremely low and high sunspot activities. The third topic takes Kazakhstan as an example to empirically analyze the impact of climate change on cereal trade by including them as determinants in the gravity model. Our results show that climate changes in Kazakhstan, measured by precipitation and temperature, could increase the export of wheat and rice and the import of maize, and decrease the import of wheat. Specifically, as a major crop in Kazakhstan, increasing precipitation by 1 millimeter during the major cropping season from May to August, will significantly enhance export of wheat by 0.7% and reduce the import by 1.7%; increasing temperature by 1°C during the same cropping season will significantly increase export of wheat by 21.9% and reduce the import by 49.4%. Based on these findings, this dissertation offers some policy implications as follows. First, compared with the objective poverty line, the measurement of subjective poverty is a more flexible method to reflect the poverty perception particularly when extreme poverty is not an important issue. Thus, it is necessary to integrate subjective poverty into the policy evaluation system and combine both subjective and objective poverty to show a full picture of poverty reduction in rural China. Second, projecting food prices and making food policies should consider sunspots. A better forecast of market price could help traders make better investment strategies, and help governments make better food security policies. Third, under the increased challenges of climate change, international cereal trade could be an effective adaption to ensuring food supply. Thus, a well-functioning international cereal trade system should be taken into consideration so as to support the adaption to climate change. Nevertheless, as an important cereal trade country around the world, the dramatic adjustments of cereal trade patterns resulting from climate change in Kazakhstan may affect global food security. For this reason, it is necessary to integrate international food trade into the other climate change adaption approaches in the future.