Classical decision rules and adaptation to climate change*

One approach to rationalising policies for addressing potentially catastrophic climate change when such policies may prove unnecessary is to suppose the policies provide a form of social insurance even in the presence of pure uncertainty. Then, provided the policies are effective, such insurance can be justified as a precautionary or minimax response. Even if the policies are potentially ineffective however, intervention can be justified as an attempt to minimise the regret experienced by future generations. This reasoning extends to justify ‘all weather’ policies provided such policies always reduce policy costs. If, however, policy decisions provide ‘all weather’ benefits in only certain states of the world, this rationale breaks down. Minimising regret can establish a case for ‘mixed’ policy responses provided adopting a policy mix precludes the chance that intervention will fail altogether. Precautionary policies and policies which minimise regret are computed for a simple, dynamic, adaptive climate change planning problem and sufficient conditions for policy maker pessimism provided.     

The adoption and impact of engineering‐type measures to address climate change: evidence from the major grain‐producing areas in China

Employing an endogenous switching regression model, we investigate the drivers underlying the adaptations made by farm households and their impacts on crop net incomes for adopters and nonadopters, based on a large panel survey data set across the major grain‐producing provinces in China. The results show that: (i) access to public climate information and technical or physical support increases the likelihood that farmers adapt to climate change by undertaking irrigation and/or drainage measures; and (ii) decisions to adapt increased crop yield, but they did not significantly increase crop profit margins. This point appears to have been ignored by previous studies. Based on these new empirical results, the paper suggests that government should continue to provide climate information and various types of supports to improve farmers’ adaptation abilities and help to reduce the levels of factor input by, for example, substituting organic for chemical fertiliser inputs. Such government‐led policies should be supported alongside the implementation of domestic agricultural supply‐side reform.     

Farmers’ risk preferences and pesticide use decisions: evidence from field experiments in China

China faces health and environmental problems associated with the use of agricultural chemicals, including pesticides. While previous studies have found that risk aversion affects pesticide use in China, they have focused primarily on commercial cotton farmers. In this study, we consider the case of smaller, semisubsistence and subsistence farmers in a poor and landlocked province of China (Yunnan). We use a field experiment to measure risk aversion and collect detailed data on farm production and input use to specifically ask whether risk aversion affects pesticide use, and whether this effect differs for subsistence farmers producing exclusively for home consumption versus semisubsistence farmers who produce both for home and the market. We find that risk aversion significantly increases pesticide use, particularly for subsistence farmers and for market plots by semisubsistence farmers. Further, this effect of risk aversion significantly decreases with farm size for subsistence farmers, but not for semisubsistence farmers, implying that pesticide use may be used to ensure sufficient food supply for home consumption. Finally, we find barriers to the use of pesticides for subsistence farmers, both in terms of financial constraints and economies of scale. This finding implies that risk‐mitigation strategies, such as crop insurance, may not target food security concerns of subsistence farmers. Given these different motivations for pesticide use, policymakers may wish to consider effective tools to support rural food security for farmers in the poorer regions of China in order to decrease pesticide use.     

The importance of ‘extremely unlikely’ events: tail risk and the costs of climate change

In assessing the risks associated with climate change, ‘tail risks’ (low‐probability extreme events) often play a much larger role than their probability alone might indicate. There are three main reasons for this: the linear relationship between sensitivity and warming; the convexity of the damage function; and the concavity of the utility function. Ignoring the upper tail of the distribution of possible outcomes will result in serious underestimates of the social cost of carbon dioxide (CO₂) emissions and of the socially optimal price for emissions.     

Farm-level adaptation to climate change in Western Bangladesh: An analysis of adaptation dynamics,profitability and risks

Using long-term district-level climate data and a case study from a drought-prone village in western Bangladesh, this research explored trends in climate change, and analysed farmers’ adaptation dynamics, profitability and risks. This is the first study of its kind for drought-prone areas in Bangladesh.Farmers perceived climate changes included increases in temperature and decreases in rainfall which were as consistent with the trends of Chuadanga climate records. Farmers’ adaptation measures included changes in cropping systems, cropping calendars, crop varieties, agronomic practices, crop diversification and improved animal husbandry. Reducing environmental stress, ensuring self-sufficiency in staple crops (mainly rice) and other crop production practices, and enhancing economic viability of farm enterprises have underpinned these adaptations. Off-farm and non-farm wage employment, temporary migration, self-employment and educating children, constituted the core non-farm adaptation strategies.Emerging cropping systems like maize/cucumber and maize/stem amaranth/rice were economically more viable than the traditional rice/rice and rice/maize systems. Despite some uncertainties, farming was preferred to off-farm work, generating higher returns to labour for all cropping systems. Limited access to stress-tolerant varieties, extension services and affordable agricultural credit, combined with high production costs, variability in crop yields and output prices, are the main barriers to adaptation. Stronger agricultural research and support services, affordable credit, community-focussed farming education and training are critically important for effective adaptation to climate change.     

Modeling climate change and agriculture: an introduction to the special issue

This issue of Agricultural Economics is a special issue containing articles on model performance in assessing the effects of climate change, bioenergy policy, and socioeconomics on agriculture. The contributions present results from a global economic model intercomparison activity undertaken as part of the AgMIP Project ( www.agmip.org ). The origins of the comparison activities can be traced to a project that was organized by the OECD in late 2010 to compare results from three models. The current phase of the research includes 10 models and was designed in part to support of the IPCC fifth assessment report (AR5). The special issue includes seven peer‐reviewed articles that present thematic results from a range of modeling strategies, with partial and general equilibrium modeling as a high level distinction but a myriad of differences within these two model types. A central common element is harmonization on biophysical effects using crop models and socioeconomic effects using drivers from the Shared Socioeconomic Pathways developed as part of the AR5 process. The special issue provides broad insights into how the modeling communities approached the interactions of climate, socioeconomics, bioenergy policy on agricultural outcomes, including land use, prices, consumption, and production.     

The impacts of climate change on Australia and New Zealand: a Gross Cell Product analysis by land cover*

This paper examines the newly constructed geographically scaled economic output measure, Gross Cell Product (GCP), of Australia and New Zealand to quantify the impacts of climate change in the region. The paper discusses advantages of using the GCP instead of the Gross Domestic Product. The paper reveals that the GCP falls sharply as temperature increases in the region. A 1°C increase in temperature would decrease the productivity with an elasticity of ?2.4. A 1 per cent decrease in precipitation would decrease productivity with an elasticity of ?2.3. However, forest vegetation on the coasts will benefit from initial warming. We find that the changes in climate means are potentially more harmful than changes in climate variability. In the long term, a 3.4° warming coupled with 6.6 mm decrease in rainfall would decrease the GCP by 34 per cent by 2060. The damage is largely accounted for by population effects. The paper confirms that Australia is highly constrained by climate and geographic factors.     

Declining inflows and more frequent droughts in the Murray–Darling Basin: climate change,impacts and adaptation*

It is likely that climate change will be associated with reductions in inflows of water to the Murray–Darling Basin. In this study, we analyse the effects of climate change in the Murray–Darling Basin using a simulation model that incorporates a state‐contingent representation of uncertainty. The severity of the impact depends, in large measure, on the extent to which climate change is manifested as an increase in the frequency of drought conditions. Adaptation will partially offset the adverse impact of climate change.     

Social Capital,Income Diversification and Climate Change Adaptation: Panel Data Evidence from Rural Ethiopia

The choice between specialisation and diversification of income is driven by multiple, interacting factors, such as economies of scale and scope, risk considerations, context, and household characteristics. Using panel data from Ethiopia, we investigate the role of social capital and the covariate risk of climate change and their interaction. We find that households with greater social capital tend to be more specialised, implying that diversification and informal insurance are substitutes in the mitigation of risk. We also find that this effect is significantly weaker in regions more prone to climate change, which is consistent with the average farmer being aware that informal insurance is not an effective protection against risks that affect the entire social network. We use instrumental variable random effects estimation to account for the plausible endogeneity of social capital and we also establish that our results do not depend on the poorest and most constrained individuals in our sample.     

The impact of population growth and climate change on food security in Africa: looking ahead to 2050

Providing nutritious and environmentally sustainable food to all people at all times is one of the greatest challenges currently facing society. This problem is particularly acute in Africa where an estimated one in four people still lack adequate food to sustain an active and healthy life. In this study, we consider the potential impact of future population growth and climate change on food security in Africa, looking ahead to 2050. A modelling framework termed FEEDME (Food Estimation and Export for Diet and Malnutrition Evaluation) was used which was characterized to model the impacts of future climate changes (utilizing the Intergovernmental Panel on Climate Change Special Report on Emissions Scenarios projections) and projected population growth on food availability and subsequent undernourishment prevalence in 44 African countries. Our results indicate that projected rapid population growth will be the leading cause of food insecurity and widespread undernourishment across Africa. Very little to no difference in undernourishment projections were found when we examined future scenarios with and without the effects of climate change, suggesting population growth is the dominant driver of change. Various adaptation options are discussed, such as closing the yield gap via sustainable intensification and increasing imports through trade and aid agreements. These strategies are likely to be critical in preventing catastrophic future food insecurity.     

Measuring impacts and adaptations to climate change: a structural Ricardian model of African livestock management1

This article develops a new cross‐sectional methodology that explicitly incorporates adaptation into an analysis of the impacts of climate change. The methodology examines how a farmer will change choices of species and number to adapt to climate. The approach is applied to study Africa, where the impacts of climate change are expected to be the most severe. The results indicate that in warmer places, African farmers switch from beef cattle to more heat‐tolerant goats and sheep. In wetter places, farmers switch from cattle and sheep to goats and chickens. The results indicate that large commercial livestock operations specializing in beef cattle will be hard hit from climate change whereas small farmers who can easily substitute to goats and/or sheep will be more resilient.     

土地供给结构、财政压力与房价——来自广东省的经验分析

研究目的:实证检验地方政府土地供给结构对区域房价的影响。研究方法:在分析土地供给结构影响房价机理的基础上,提出本文的研究假说;基于广东省21个地级及以上城市2009—2015年的统计数据,运用面板数据模型加以检验。研究结果:土地供给结构显著影响房价水平,静态和动态面板数据模型估计表明住宅用地供给比例提高1%,房价分别下降0.126%和0.103%;基础设施用地供给比例提高1个百分点,房价分别上升0.062%和0.051%;工业用地供给比例提高1个百分点,房价则分别上升0.116%和0.110%。地方政府财政压力在土地供给结构与房价的因果链条中起到重要的调节效应,即财政压力越大的地区,提高住宅用地供给比例对房价的抑制效果微弱,而基础设施和工业用地供给比例的增加则对房价的抬升效应更大。研究结论:为抑制过快上涨的房价,保障城市居民住有所居,在加快土地供给侧结构性改革,优化土地供给结构,加大住宅用地供应的同时,也应深化财税体制改革,使地方政府对土地财政的依赖逐步向持有环节的房地产税转变,以降低财政压力对土地供给侧结构性改革抑制房价过快上涨的扭曲效应。     

Imported Intermediate Inputs and Firms’ Productivity Growth: Evidence from the Food Industry

Imported goods play a central role in determining the gains from trade. Using detailed trade and firm‐level data for Italy and France, we investigate the relationship between trade integration, imported intermediate inputs and firm performance in the food industry. Our main findings show that an increase in import competition spurs firm‐level productivity growth. Furthermore, the productivity growth effect attributable to imported intermediate inputs is significantly stronger than the effect due to imported final products. In addition, we find that new imported inputs are of particular importance, especially for Italian food firms, though less so for the French firms. Finally, the productivity growth effect of trade integration tends to be asymmetric across firms: more productive firms gain more from trade integration. These stylised facts have interesting policy implications.     

China’s Agricultural Policy Transition: Impacts of Recent Reforms and Future Scenarios

This article reviews recent developments in China’s agricultural domestic support policy, especially the transition from taxing farmers and agriculture to providing direct subsidies to grain production and purchased inputs. A model‐based quantitative analysis on the effects of these policy changes is presented. Simulation results suggest that recent policy changes have achieved the declared policy goals of increasing grain production and boosting farm income. Much of the increase in grain production and farm income can be attributed to higher per unit return to arable land, land reallocation to grain production and extra agricultural employment triggered by the policy changes. Based on the assumption that China’s public assistance to agriculture and farmers will continue and rise, two hypothetical future scenarios are simulated. Using all the support permitted under WTO de minimis limits with existing instruments, China’s policy will increase grain production, change trade patterns seemingly contrary to China’s comparative advantage, increase rural employment and significantly increase farm income (by more than 12%). If, however, decoupled instruments are applied to raise China’s agricultural domestic support to the same level, China’s agricultural production and trade will remain unchanged, rural employment remain stable, but farm income will be increased by nearly 15%.     

Market imperfections,access to information and technology adoption in Uganda: challenges of overcoming multiple constraints

Limited empirical evidence exists on how multiple binding constraints influence the adoption of improved technologies by smallholder farmers. This article uses the case of groundnut variety adoption in Uganda to investigate the role of information, seed supply, and credit constraints in conditioning technology uptake. New data from a household survey in seven groundnut growing districts (n = 945) indicate that 8% of farmers lack information on new varieties, while 18% and 6% of farmers, respectively, cannot adopt mainly due to seed supply and capital constraints. A tobit‐type specification that considers all nonadopters as being uninterested in the technology (i.e., corner solutions) would lead to inconsistent parameter estimates and incorrect conclusions in this context. We therefore estimate a modified multi‐hurdle specification of demand for new varieties, taking into account how information, seed supply, and capital constraints jointly determine adoption probability and intensity. The study reveals new empirical insights on why agricultural technology adoption in Africa has lagged behind: slow uptake is not mainly due to a lack of economic incentives, but rather a reflection of information, seed supply, and credit constraints that prevent farmers from translating their desired demand into adoption of modern varieties. Policy implications are discussed.     

Demand for milk quantity and safety in urban China: evidence from Beijing and Harbin

Urban households account for most of the milk consumption in China, but their consumption is hampered by safety concerns. Using survey data collected in Beijing and Harbin in 2010, this paper simultaneously analyses urban households' milk consumption using a multiple linear model and their willingness‐to‐pay for milk safety using an ordered choice model. The results of this study show that as income increases, urban households consume more milk and are willing to pay a higher premium for milk safety. Modern food marketing channels play a positive role in stimulating milk consumption and building consumers' confidence in milk safety. The growth in the elderly population influences milk consumption positively, but their demand for milk safety is negatively affected by higher price. The combined analysis of households' demand for milk quantity and safety may be useful to the Chinese government in promoting the development of the domestic milk industry and to dairy firms in exploring the milk market in China.     

Community-based rural residential land consolidation and allocation can help to revitalize hollowed villages in traditional agricultural areas of China: Evidence from Dancheng County,Henan Province

The accelerated rural hollowing driven by vast and increasing out-migration of rural labors under urban–rural dual-track system has imposed huge obstacles on improving land use efficiency and coordinating urban–rural development in China. Taking Dancheng County in Henan Province as an example, this paper analyzes the status quo of rural hollowing and discusses two typical rural residential land consolidation and allocation (RRLCA) practices in traditional agricultural areas (TAAs) of China. The results show that, Dancheng experienced rapid rural hollowing characterized as the hollowing of rural industries, infrastructure, and residential population and settlements. However, Dancheng has considerable potential and the necessity of RRLCA, for the model-based estimation shows that the potential of increasing farmland by carrying out RRLCA was about 5649 ha. The two community-based RRLCA practices show positive effects on the improvement of local living conditions, increment of farmland area and development of rural industries. Their experiences, including self-organized rural planning, democratic decision-making, and endogenous institutional innovation may benefit future RRLCA. Overall, it indicates that promoting community-based RRLCA scientifically according to local conditions could provide an integrated platform for increasing farmland area, developing modern agriculture, promoting new countryside construction, and thus revitalize hollowed villages. On considering the limitations and obstacles of current initiatives, suggestions for future RRLCA in rural China have been put forward.     

Trade Elasticity,Gravity and Trade Liberalisation: Evidence from the Food Industry

We present an econometric investigation of the trade effect produced by the elimination of tariffs in 18 food sectors for a large sample of developing and developed countries. The standard CES monopolistic competition trade model and the gravity equation were used to estimate trade substitution elasticities, exploring their sensitivity to different estimation methods. Using these elasticities, we simulate the trade effect of the elimination of tariffs, dealing with the problem of uncertainty in the estimated values. Results point to a significant variation in the elasticities estimated by different econometric methods, suggesting that the Poisson pseudo‐maximum‐likelihood estimator significantly inflates their magnitude. Simulation results indicate that trade liberalisation will strongly increase food exports especially from high income and emerging countries, leading to a general loss of market share by developing countries. The simulated trade flows obtained from the econometric approach are quite close to current evidence based on computable general equilibrium models.     

Landownership Distribution,Socio‐Economic Precariousness and Empowerment: The Role of Small Peasants in Maresme County (Catalonia,Spain) from 1850 to the 1950s

I present fresh data that show the leading role played by smallholder peasants in land‐use intensification, technical improvement and landscape transformation in Maresme County (province of Barcelona, Spain) between 1850 and the 1950s. As a reaction to their precarious situation, caused by an unequal landownership distribution (which is assessed by looking at the minimum‐income and maximum workable farm sizes), smallholders drove agrarian changes in this coastal Mediterranean area. The results of their individual efforts, and their collective action through social mobilization and cooperatives, entailed a socio‐economic and political improvement, especially in denser populated areas closer to markets, until the arrival of Franco's regime.