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Using Hedonic Models of Solar Radiation and Weather to Assess the Economic Effect of Climate Change: The Case of Mosel Valley Vineyards

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  • Orley Ashenfelter

    (Princeton University)

  • Karl Storchmann

    (Whitman College and New York University)

Abstract

In this paper we use two alternative methods to assess the effects of climate change on the quality of wines from the vineyards of the Mosel Valley in Germany. In the first, structural approach we use a physical model of solar radiation to measure the amount of energy collected by a vineyard and then to establish the econometric relation between energy and vineyard quality. Coupling this hedonic function with the physics of heat and energy permits a calculation of the impact of any temperature change on vineyard quality (and prices). In a second approach, we measure the effect of year-to-year changes in the weather on land or crop values in the same region and use the estimated hedonic equation to measure the effect of temperature change on prices. The empirical results of both analyses indicate that the vineyards of the Mosel Valley will increase in value under a scenario of global warming, and perhaps by a considerable amount. © 2010 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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Bibliographic Info

Article provided by MIT Press in its journal The Review of Economics and Statistics.

Volume (Year): 92 (2010)
Issue (Month): 2 (May)
Pages: 333-349

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Handle: RePEc:tpr:restat:v:92:y:2010:i:2:p:333-349

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Cited by:
  1. Robin Cross & Andrew J. Plantinga & Robert N. Stavins, 2011. "What Is the Value of Terroir?," American Economic Review, American Economic Association, American Economic Association, vol. 101(3), pages 152-56, May.
  2. John Clapp & Piet Eichholtz & Thies Lindenthal, 2012. "Real Option Value over a Housing Market Cycle: West Berlin," ERSA conference papers, European Regional Science Association ersa12p264, European Regional Science Association.
  3. Morgan Kelly & Cormac Ó Gráda, 2012. "The Waning of the Little Ice Age," Working Papers, School Of Economics, University College Dublin 201211, School Of Economics, University College Dublin.
  4. Ashenfelter, Orley & Storchmann, Karl, 2010. "Measuring The Economic Effect Of Global Warming On Viticulture Using Auction, Retail And Wholesale Prices," Working Papers, American Association of Wine Economists 90482, American Association of Wine Economists.
  5. Robin Cross & Andrew J. Plantinga & Robert N. Stavins, 2011. "The Value of Terroir: Hedonic Estimation of Vineyard Sale Prices," NBER Working Papers 16762, National Bureau of Economic Research, Inc.
  6. Gokcekus, Omer & Finnegan, Clare M., 2014. "Classification and Re-Classification: Oregon’s Willamette Valley AVA and its New Sub-AVAs," Working Papers, American Association of Wine Economists 164642, American Association of Wine Economists.
  7. Kym Anderson, 2010. "The New World in Globalizing Wine Markets: Lessons from Australia," Wine Economics Research Centre Working Papers, University of Adelaide, Wine Economics Research Centre 2010-09, University of Adelaide, Wine Economics Research Centre.
  8. S. Urhausen & S. Brienen & A. Kapala & C. Simmer, 2011. "Climatic conditions and their impact on viticulture in the Upper Moselle region," Climatic Change, Springer, Springer, vol. 109(3), pages 349-373, December.

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