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Biophysical and Economic Uncertainty in the Analysis of Poverty Impacts of Climate Change

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  • Hertel, Thomas W.
  • Lobell, David
  • Verma, Monika

Abstract

This paper seeks to understand the main sources of uncertainty in assessing the impacts of climate change on agricultural output, international trade, and poverty. We incorporate biophysical uncertainty by sampling from a distribution of productivity shocks reflecting the impacts of climate on agricultural yields in 2030. These shocks, in turn, affect the global economy. The response of economic agents to climate change is the second source of uncertainty in our estimates. We find that, even though it is difficult to predict where in the world agricultural crops will be favorably affected by climate change, we find that the responses of output and exports can be far more robust. This is due to the fact that supply and demand decisions depend on relative prices, and relative prices depend on productivity changes relative to other crops in a given region, or relative to similar crops in other parts of the world. We also find that uncertainty in poverty impacts of climate change appears to be almost entirely driven by biophysical uncertainty. Further reducing this uncertainty will require improving climate models and the crop models used to interpret the impacts of likely future climate on crop productivity.

Suggested Citation

  • Hertel, Thomas W. & Lobell, David & Verma, Monika, 2011. "Biophysical and Economic Uncertainty in the Analysis of Poverty Impacts of Climate Change," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103691, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea11:103691
    DOI: 10.22004/ag.econ.103691
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    References listed on IDEAS

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    1. Arndt, Channing, 1996. "An Introduction To Systematic Sensitivity Analysis Via Gaussian Quadrature," Technical Papers 28709, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    2. Thomas W. Hertel & Maros Ivanic & Paul V. Preckel & John A. L. Cranfield, 2004. "The Earnings Effects of Multilateral Trade Liberalization: Implications for Poverty," The World Bank Economic Review, World Bank Group, vol. 18(2), pages 205-236.
    3. Ivanic, Maros & Martin, Will, 2008. "Implications of higher global food prices for poverty in low-income countries," Policy Research Working Paper Series 4594, The World Bank.
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    Cited by:

    1. Hussein, Zekarias & Hertel, Thomas W. & Golub, Alla, 2013. "Climate change, mitigation policy, and poverty in developing countries," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150732, Agricultural and Applied Economics Association.

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    Keywords

    Crop Production/Industries; Environmental Economics and Policy; International Relations/Trade;
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