Economic Impacts Of Climate Change Research Articles

The Economic Impacts of Climate Change: Evidence from Agricultural Output and Random Fluctuations in Weather

This paper measures the economic impact of climate change on US agricultural land by estimating the effect of random year-to-year variation in temperature and precipitation on agricultural profits. The preferred estimates indicate that climate change will increase annual profits by $1.3 billion in 2002 dollars (2002$) or 4 percent. This estimate is robust to numerous specification checks and relatively precise, so large negative or positive effects are unlikely. We also find the hedonic approach—which is the standard in the previous literature—to be unreliable because it produces estimates that are extremely sensitive to seemingly minor choices about control variables, sample, and weighting. (JEL L25, Q12, Q51, Q54)

Companies rise to the carbon challenge [carbon emission reduction

Many British businesses have vowed to undertake major environmental programs in 2007. These include Marks & Spencer and Tesco, both of whom have recently announced their pledge to significantly reduce their firms' carbon emissions. Representatives from the London Stock Exchange, Barclays, Shell UK, Corus, British Airways and McKinsey have also committed to participating in a CBI task force to study the Stern Review, the government-funded report on the economic impact of climate change. In addition, the government has announced plans for a gold standard, a voluntary standard and code of practice to help consumers and businesses navigate the available carbon offsetting options. While campaigners are pleased with this development, they believe an economy-wide response from the UK industry is still needed.

The economic impact of climate change on Kenyan crop agriculture: A Ricardian approach

This paper measures the economic impact of climate on crops in Kenya. We use cross-sectional data on climate, hydrological, soil and household level data for a sample of 816 households. We estimate a seasonal Ricardian model to assess the impact of climate on net crop revenue per acre. The results show that climate affects crop productivity. There is a non-linear relationship between temperature and revenue on one hand and between precipitation and revenue on the other. Estimated marginal impacts suggest that global warming is harmful for crop productivity. Predictions from global circulation models confirm that global warming will have a substantial impact on net crop revenue in Kenya. The results also show that the temperature component of global warming is much more important than precipitation. Findings call for monitoring of climate change and dissemination of information to farmers to encourage adaptations to climate change. Improved management and conservation of available water resources, water harvesting and recycling of wastewater could generate water for irrigation purposes especially in the arid and semi-arid areas.

The Stern Review on the Economic Effects of Climate Change

The Stern Review on the Economic Effects of Climate Change

Why Worry About Climate Change? A Research Agenda

Estimates of the marginal damage costs of carbon dioxide emissions suggest that, although climate change is a problem and some emission reduction is justified, very stringent abatement does not pass the cost-benefit test. However, current estimates of the economic impact of climate change are incomplete. Some of the missing impacts are likely to be positive and others negative, but overall the uncertainty seems to concentrate on the downside risks and current estimates of the damage costs may have a negative bias. The research effort on the economic impacts of climate change is minute, and should be strengthened, with a particular focus on the quantification of uncertainties; estimating missing impacts, interactions between impacts and higher-order effects; the valuation of biodiversity loss; the implications of extreme climate scenarios and violent conflict; and climate change in the very long term.

Will African Agriculture Survive Climate Change?

Abstract Measurement of the likely magnitude of the economic impact of climate change on African agriculture has been a challenge. Using data from a survey of more than 9,000 farmers across 11 African countries, a cross-sectional approach estimates how farm net revenues are affected by climate change compared with current mean temperature. Revenues fall with warming for dryland crops (temperature elasticity of −1.9) and livestock (−5.4), whereas revenues rise for irrigated crops (elasticity of 0.5), which are located in relatively cool parts of Africa and are buffered by irrigation from the effects of warming. At first, warming has little net aggregate effect as the gains for irrigated crops offset the losses for dryland crops and livestock. Warming, however, will likely reduce dryland farm income immedia-tely. The final effects will also depend on changes in precipitation, because revenues from all farm types increase with precipitation. Because irrigated farms are less sensitive to climate, where water is available, irrigation is a practical adaptation to climate change in Africa.

The Economic Impacts of Climate Change: Evidence from Agricultural Profits and Random Fluctuations in Weather

The Economic Impacts of Climate Change: Evidence from Agricultural Profits and Random Fluctuations in Weather

Regional Industries and Environmental Impacts. Long-run Regional Economic Effects of Climate Change: The Case of the Coastal and Estuary Zone of the German Northwest

The paper explores the relations of (1) regionalized climate change impulses; (2) their impacts on regional industry sectors; and (3) a regional econometric impact analysis. It develops a methodology by which the impulses of a regional climate change scenario can be transformed into ‘primary’ impacts on the capital stock and value added of climate-sensitive regional industries. These industries are vulnerable to ‘creeping’, i.e. continuous, climate change impulses, and they tend to react through ‘defensive’ investment. In addition, a singular flooding event is simulated for a specific local area and its different capital stocks. The stock damages and value-added losses of both the continuous industrial impacts and the singular flooding are inserted into a regional econometric model. This is sectorally disaggregated in stock, value-added and investment functions. It is also calibrated in the very-long run (through to the year 2040), according to different scenarios. The regional economic ‘secondary’ effects on the regional GNP are calculated. In addition to the calculation of regional economic primary and secondary impacts, the methodological issue of generating more transparency of the causal chains by use of damage functions, reaction functions, and comparative defensive strategies are discussed.

Valuing the impacts of climate change on protected areas in Africa

This study quantifies the economic costs of climate change impacts on protected areas in Africa. Downscaled results from four Global Circulation Models (GCMs) are used to classify different ecosystems in accordance with the Holdridge Life Zone (HLZ) system. A benefits transfer approach is then used to place an economic value on the predicted ecosystem shifts resulting from climate change in protected areas. The results provide approximations for the impacts on biodiversity in Africa under the “business-as-usual” scenario established by the Intergovernmental Panel on Climate Change (IPCC) for the middle and end of the 21st century. The geographical analysis shows that there are twenty HLZs in Africa and all of them are represented in the protected area network. Three of these HLZs do not change in extent as a result of climate change. Assuming initially that the willingness to pay (WTP) values and the preferences for different ecosystem services remain constant, three of the GCM models show an (undiscounted) negative economic impact of climate change for protected areas in Africa for the year 2100. The worst-case damage scenario totals USD 74.5 million by 2100. However, the model for the year 2065 shows a higher undiscounted value than the present. The finding of positive net impacts from warming is consistent with the predictions of other macro models that show potential gains from warming scenarios.

Measuring the economic impact of climate change on major South African field crops: a Ricardian approach

This study employed a Ricardian model to measure the impact of climate change on South Africa's field crops and analysed potential future impacts of further changes in the climate. A regression of farm net revenue on climate, soil and other socio-economic variables was conducted to capture farmer-adapted responses to climate variations. The analysis was based on agricultural data for seven field crops (maize, wheat, sorghum, sugarcane, groundnut, sunflower and soybean), climate and edaphic data across 300 districts in South Africa. Results indicate that production of field crops was sensitive to marginal changes in temperature as compared to changes in precipitation. Temperature rise positively affects net revenue whereas the effect of reduction in rainfall is negative. The study also highlights the importance of season and location in dealing with climate change showing that the spatial distribution of climate change impact and consequently needed adaptations will not be uniform across the different agro-ecological regions of South Africa. Results of simulations of climate change scenarios indicate many impacts that would induce (or require) very distinct shifts in farming practices and patterns in different regions. Those include major shifts in crop calendars and growing seasons, switching between crops to the possibility of complete disappearance of some field crops from some region.

The Economic Impact of Climate Change on Canadian Commercial Navigation on the Great Lake

The decrease in water depths facing commercial navigation in the Great Lakes–St. Lawrence River system is likely the greatest potential impact of climate change on freight transportation in Canada. This water transportation system is an efficient means of transporting bulk and other commodities through a heavily industrialized part of North America. Great Lakes vessels, however, often have to limit their loads to maintain minimum under-keel clearances when water depths are restricted in harbours and connecting channels. Climate change due to increasing atmospheric concentrations of greenhouse gases is expected to bring about lower water levels and further reduced depths in the Great Lakes, with consequent reductions in vessel cargo capacities and increases in shipping costs. The lower water levels predicted as a result of a doubling of the atmospheric concentration of carbon dioxide could increase annual transportation costs by 29 percent, more moderate climate change could result in a 13 percent increase in annual shipping costs, based on current prices. The impacts vary between commodities and routes.

On climate change and economic growth

The economic impact of climate change is usually measured as the extent to which the climate of a given period affects social welfare in that period. This static approach ignores the dynamic effects through which climate change may affect economic growth and hence future welfare. In this paper we take a closer look at these dynamic effects, in particular saving and capital accumulation. With a constant savings rate, a lower output due to climate change will lead to a proportionate reduction in investment which in turn will depress future production (capital accumulation effect) and, in almost all cases, future consumption per capita. If the savings rate is endogenous, forward looking agents would change their savings behavior to accommodate the impact of future climate change. This suppresses growth prospects in absolute and per capita terms (savings effect). In an endogenous growth context, these two effects may be exacerbated through changes in labour productivity and the rate of technical progress. Simulations using a simple climate-economy model suggest that the capital accumulation effect is important, especially if technological change is endogenous, and may be larger than the direct impact of climate change. The savings effect is less pronounced. The dynamic effects are more important, relative to the direct effects, if climate change impacts are moderate overall. This suggests that they are more of a concern in developed countries, which are believed to be less vulnerable to climate change. The magnitude of dynamic effects is not sensitive to the choice of discount rate.

The Economic Impacts of Climate Change: Evidence from Agricultural Output and Random Fluctuations in Weather: Comment

In a series of studies employing a variety of approaches, we have found that the potential impact of climate change on US agriculture is likely negative. Deschênes and Greenstone (2007) report dramatically different results based on regressions of agricultural profits and yields on weather variables. The divergence is explained by (1) missing and incorrect weather and climate data in their study; (2) their use of older climate change projections rather than the more recent and less optimistic projections from the Fourth Assessment Report; and (3) difficulties in their profit measure due to the confounding effects of storage.

Economic Impacts of Climate Change on the Canadian Great Lakes HydroElectric Power Producers: A Supply Analysis

Current climate change research indicates that the Great Lakes hydrological system will be affected by future climate. Changes in the lake levels and flows will, in turn, impact the ability of Great Lakes hydroelectric power producers to generate electricity. Using technical specifications of turbine capacity, turbine loading orders and climate change projections, the electricity generating capacity is estimated under several climate change scenarios. These estimations are evaluated using a selection of pricing options according to economic assumptions concerning adaptation and time frame for impacts and adaptation. This work is intended to promote interest in further studies on the economic impacts of climate change.

The Economic Impacts of Climate Change: Evidence from Agricultural Profits and Random Fluctuations in Weather

This paper measures the economic impact of climate change on US agricultural land by estimating the effect of the presumably random year-to-year variation in temperature and precipitation on agricultural profits. Using long-run climate change predictions from the Hadley 2 Model, the preferred estimates indicate that climate change will lead to a $1.1 billion (2002$) or 3.4% increase in annual profits. The 95% confidence interval ranges from -$1.8 billion to $4.0 billion and the impact is robust to a wide variety of specification checks, so large negative or positive effects are unlikely. There is considerable heterogeneity in the effect across the country with California’s predicted impact equal to -$2.4 billion (or nearly 50% of state agricultural profits). Further, the analysis indicates that the predicted increases in temperature and precipitation will have virtually no effect on yields among the most important crops. These crop yield findings suggest that the small effect on profits is not due to short-run price increases. The paper also implements the hedonic approach that is predominant in the previous literature. We conclude that this approach may be unreliable, because it produces estimates of the effect of climate change that are very sensitive to seemingly minor decisions about the appropriate control variables, sample and weighting. Overall, the findings contradict the popular view that climate change will have substantial negative welfare consequences for the US agricultural sector.

The Economic Impacts of Climate Change: Evidence from Agricultural Profits and Random Fluctuations in Weather

This paper measures the economic impact of climate change on US agricultural land by estimating the effect of the presumably random year-to-year variation in temperature and precipitation on agricultural profits. Using long-run climate change predictions from the Hadley 2 Model, the preferred estimates indicate that climate change will lead to a $1.3 billion (2002$) or 4.0% increase in annual profits. The 95% confidence interval ranges from -$0.5 billion to $3.1 billion and the impact is robust to a wide variety of specification checks, so large negative or positive effects are unlikely. There is considerable heterogeneity in the effect across the country with California's predicted impact equal to -$0.75 billion (or nearly 15% of state agricultural profits). Further, the analysis indicates that the predicted increases in temperature and precipitation will have virtually no effect on yields among the most important crops, which suggest that the small effect on profits are not due to short-run price increases. The paper also implements the hedonic approach that is predominant in the previous literature and finds that it may be unreliable, because it produces estimates of the effect of climate change that are extremely sensitive to seemingly minor decisions about the appropriate control variables, sample and weighting. Overall, the findings contradict the popular view that climate change will have substantial negative welfare consequences for the US agricultural sector.

Temporal uncertainties of integrated ecological/economic assessments at the global and regional scales

Over the past several years, research using the Center for International Trade in Forest Products (CINTRAFOR) Global Trade Model (CGTM) and the Terrestrial Ecosystem Model (TEM) has estimated the potential effects of climate change on the global forest sector. The process of linking these two models—many model runs with alternative economic, ecological and climate scenarios—provides useful information on (i) the behavior of the economic model under alternative assumptions, (ii) integrated economic/ecological results and (iii) their implication for decision makers. Previous works indicate that assumptions on economic behavior and ecology interactions are important when estimating the economic effects of climate change on the forest sector. This paper estimates the economic effects associated with alternative transient paths of change in climate and CO 2 on the forest sector. The results indicate economic welfare measures change significantly under two alternative assumptions of the path that changes in climate and CO 2 may take. An assumption of a pseudo-transient constant rate of change to reach an equilibrium endpoint produces larger global welfare changes over the time period than a “true” transient change in climate by an average US$ 2 billion over the period 1994–2040. In addition, regional and market segment impacts are not uniformly distributed and should also be considered when programmatic needs are identified.

Economic analysis of the potential impact of climate change on recreational trout fishing in the southern Appalachian mountains: an application of a nested multinomial logit model.

Global warming due to the enhanced greenhouse effect through human activities has become a major public policy issue in recent years. The present study focuses on the potential economic impact of climate change on recreational trout fishing in the Southern Appalachian Mountains of North Carolina. Significant reductions in trout habitat and/or populations are anticipated under global warming since the study area is on the extreme margins of trout habitat of the eastern U.S. The purpose of this study is to estimate the potential welfare loss of trout anglers due to global warming. A nested multinomial logit model was developed and estimated to describe the angler's fishing choice behavior. The estimated median welfare loss (Compensating Variation) ranged from $5.63 to $53.18 per angler per single occasion under the various diminished trout habitat and/or population scenarios.

The Economic Impacts of Climate Change on Canadian Agriculture and the World: How Big are the Impacts Really?

A computable general equilibrium model was used to assess the impacts of global climate change on Canadian Agriculture. The assumption of ceteris paribus was relaxed. The results indicated that many supply and demand factors have potentially larger impacts on the Canadian and world economies over the next 5 decades than climate change. The distribution of regional impacts varied substantially. Such information is valuable for the agricultural sector and policymakers trying to allocate limited resources.

Estimating the Economic Impact of Climate Change on the Freshwater Sportsfisheries of the Northeastern U.S.

This study links models of global climate circulation, ecology, and economic valuation (hedonic travel cost and random utility models) to value the impact of global warming on freshwater sportfishing in the Northeast. An origin-specific linear random utility model (RUM) is introduced. The results of the RUM are shown to be comparable to those of a hedonic travel cost model. A doubling of atmospheric carbon dioxide is predicted to generate between a $4.6 million loss and a $20.5 million net benefit for the Northeastern United States, depending on the climate scenario.