The impact of changing climate on perennial crops: the case of tea production in Sri Lanka

Abstract

The plantation crop sector, particularly tea, is a key contributor to the Sri Lankan economy in terms of foreign exchange earnings, employment, and food supply. However, changes in temperature, rainfall, and the occurrence of extreme weather events have adversely affected the sector. Many studies in the literature have focused on climate change impacts on major annual crops; however, to date, comprehensive assessments of the economic impacts of weather variations on perennial crops are rare. In this paper, we use monthly panel data from 40 different tea estates in Sri Lanka over a 15-year period to analyse weather effects on production from the tea plantation sector. Specifically, we use a two-stage panel data approach to explore how tea production in Sri Lanka is affected by both short-term weather variations and long-term climate change. Overall, our findings show that a hotter and wetter climate will have a detrimental effect on Sri Lankan tea production. In high, medium, and low emissions futures, our predictions show a negative proportional impact from increased rainfall and increased average temperature. Under a high emissions scenario, by mid-century, a decline of 12% in annual tea production is predicted. Other climate-susceptible perennial crops such as rubber, coconut, and oil palm play similarly major roles in the economies of other developing countries, suggesting that our approach could usefully be replicated elsewhere.