The Impact of Climate Change on Agriculture: Findings from Households in Vietnam

Abstract

This paper examines farm household-level impacts of climate change by examining the relationship between climatic variables and Vietnamese agricultural output. The Ricardian technique is applied with panel data which accounts for both adaptation strategies and household characteristics. This study proposes a two-stage Hsiao model to correct for collinearity between climatic variables and individual effects. The results show that in the dry season, increases in temperatures are beneficial to all farms in the warmer southern regions, while increases in precipitation will damage only irrigated farms in the Central and South regions. The impact of higher temperature in the wet season is similar, except that it will negatively affect net revenue of irrigated farms in the long run. More rainfall in the wet season will increase net revenue in the North region only. Finally, this study combines the estimated results with future climate scenarios to predict how future changes in climate will affect farmers on aggregate.