Economic impact of global warming: The climate sensitivity of Brazilian and Indian agriculture

Most previous studies estimating the effects of global warming on agriculture have used a traditional production function approach which takes an underlying production function and varies the relevant environmental input variables to estimate the impact of these inputs on production yields. This approach, however, does not incorporate economic substitutions by farmers as environmental conditions change, and may thus overestimate the damage from climate change. The Ricardian approach, that does take into account farmer adaptation, has been used recently to estimate impacts of climate change on U.S. agriculture. However, the Ricardian approach as applied to U.S. agriculture is imperfect given data aberrations, and does not consider potentially important precipitation-temperature interaction effects. The present study adapts and extends the Ricardian methodology to estimate climate change impacts in two developing countries, Brazil and India.;Using panel data from both countries, this study carries out detailed econometric analysis estimations of how farm land values and net farm incomes vary with climate, taking into account farmer adaptation and other factors. The climate sensitivity of agriculture in the two countries is thereby measured. Various econometric procedures are used to test for robustness. A range of global warming scenarios is simulated to estimate the impact of a changing climate on net farm income and farm land values. Warming is predicted to reduce farm land values in both countries but farmer adaptation keeps these impacts relatively small. The climate change predicted for the next century would reduce Brazilian farm land values by 8% and Indian net incomes by 12% by the year 2100 AD.;Regional impacts are estimated for 3941 Brazilian municipios and 271 Indian districts. Findings indicate that climate change is expected to have strong varying seasonal and regional implications in both Brazil and India. The thesis concludes with some policy implications for Brazilian and Indian agriculture.