An Economic Analysis of Global Impacts, Adaptation and Distributional Effects
Agronomic research on crop productivity in controlled settings suggests that most individual crops have well defined climate ranges where they perform best (Chapter 2; Reilly et al., 1996; IPCC, 2007b). As one moves out of these ranges, either to cooler or warmer temperatures or to dryer or wetter conditions, crop productivity falls. The ideal climate zone for each crop is quite different. This is why one observes that specific crops tend to be grown in certain places and not others. Chapter 3 reviews a number of methodologies, used in the literature, to measure climate impacts on agricultural crops. Some of these methods ignore adaptation. They assume, for example, that crops continue to be grown where they are grown today. Even small changes in climate can have deleterious effects on crop productivity in this case. The methods that ignore adaptation tend to have more pessimistic results. For example, the predictions of the agronomic literature tend to be more dire (Rosenzweig and Parry, 1994; Parry et al., 2005). This literature tends to predict that climate change will lead to substantial reductions in yields. Economic research that takes into account adaptation, however, suggests that crop choice and livestock choice are endogenous. Farmers select which crop to grow given what is most profitable. Economic models of farm behavior challenge the assumption at the heart of the agronomic studies, that crop choice and livestock choice are exogenous and unchanging. Instead, economists find that farmers will switch crops and livestock in direct response to climate change....
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