The impact of climate change on permanent crops in an Alpine region: A Ricardian analysis

Abstract

The Ricardian approach has been applied to many different geographic contexts and most applications concern large countries. Only few studies deal with Europe. This paper applies the Ricardian approach to measure the impact of climate on the agricultural system of a small Italian Alpine region where permanent cultivations are the main crop. Structural and economic data about farmers growing apples and grapes are extracted from the Italian Farm Accountancy Data Network (FADN). It tests three possible functional forms and it highlights the importance of controlling not only for farms’ characteristics but also for farmers’ strategic decisions such as specialization and quality certification. In contrast with overall beneficial effects of climate change found for broad areas in Europe (Germany and England), climate change seems to imply a reduction in annual net revenues in our study area. From a methodological point of view, results show that if there is enough climatic variation across the sample and suitable control variables are available, the Ricardian approach can be applied also on a small territorial scale, even though the results depend heavily on the adopted functional form.