Why Climate Change Impacts on Agriculture Could be Economically Substantial

For most of human history, agriculture accounted for the dominant share of GDP and employed most labor. Johnson (1997) estimates that in 1800 about 75–80 percent of the labor force in developed nations were engaged in farming, and only 11 percent of the population lived in urban settings (cities with more than 5000 inhabitants). For some of the world, the industrial revolution changed everything. During the 19th century, labor productivity in agriculture (and everything else) increased sharply. By 1980 a unit of labor produced 50–100 times as much wheat or corn as compared to 1800. Productivity growth initially came from machinery replacing human and animal work effort. Since 1930, productivity gains came mostly from development of high-yielding crop species and adoption of intensive farming practices, including use of commercial fertilizers and pesticides. Crop yields (output per unit of land area) increased roughly threefold in the second half of the 19th century, both in the developed and in the developing world. This “Green Revolution” has been attributed more to the efforts of a single man, Norman Borlaug, than to the entrepreneurial efforts of all the world’s farmers.