The Impact of Climate Change on Danish Agriculture

Abstract

New and unique climate prediction data show the regional effect of climate change for weather outcomes in Denmark. The present study utilizes this data to forecast and discuss the impacts of climate change on Danish agriculture, namely for the distribution of wheat yields. Using a large data set with farm-level information combined with data on local meteorological observations, a fixed effect panel data model for wheat yields is estimated, including a prior tobit model to correct for the selection bias from wheat production. Climate change is found to a have strong negative impact on average yields under the current technological constraints on agriculture. This fall in yields is transformed into a net increase in mean yields once the impact of technological progress on yields is taken into account. In a regionally differentiated analysis, the peninsular Jutland in the west experiences a larger decrease in mean yields than the eastern parts of the country. In this context I point to the need for further studies on the specific cause of the regional differences of the impact as well as the informational needs on climate change, in order to improve the understanding of potential adaptation strategies.