An Economic Analysis of Global Impacts, Adaptation and Distributional Effects
- New Horizons in Environmental Economics series
This chapter reviews various Ricardian studies that have relied on aggregate data that reports average responses across all farmers from a county, district or municipio. The aggregate data is attractive because it is collected by agricultural census administrations in various countries, is pre-existing, and accessible. Unfortunately, such data is not available in many countries and it is often not consistent across countries. In order to use this data, one generally needs a single country with good agriculture census capabilities that is also large enough for one to observe farms across different climate zones. It is not an accident that the first Ricardian studies were done in the US, India and Brazil, countries known for their consistent and reliable census data. However, in some circumstances, it is possible to study even a small country such as Sri Lanka or Israel if there is enough variation in desired attributes, including climate. As discussed in Chapters 3 and 4, the Ricardian method is a crosssectional method that regresses land value or net revenue on climate, soils and other control variables. Because it is based on climate and not weather, the method is examining the equilibrium response of each farm to the climate it is in. The equilibrium response captures secondary effects such as differences in diseases, pests and ecosystems that are caused by climates. The equilibrium response also captures the long-run adaptations of the farmer since each farmer has adapted to where they live. US STUDIES The first applications of the Ricardian method...
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