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Measuring The Economic Effect Of Global Warming On Viticulture Using Auction, Retail And Wholesale Prices

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  • Ashenfelter, Orley
  • Storchmann, Karl

Abstract

In this paper we measure the effect of year to year changes in the weather on wine prices and winery revenue in the Mosel Valley in Germany in order to determine the effect that climate change is likely to have on the income of wine growers. A novel aspect of our analysis is that we compare the estimates based on auction, retail, and wholesale prices. Although auction prices are based on actual transactions, they provide a thick market only for high quality, expensive wines and may overestimate climate’s effect on farmer revenues. Wholesale prices, on the other hand, do provide broad coverage of all wines sold and probably come closest to representing the revenues of farmers. Overall, we estimate a 1°C increase in temperature would yield an increase in farmer revenue of about 30 percent.

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Bibliographic Info

Paper provided by American Association of Wine Economists in its series Working Papers with number 90482.

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Date of creation: May 2010
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Handle: RePEc:ags:aawewp:90482

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Web page: http://www.wine-economics.org
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Keywords: wine; global warming; auction prices; retail prices; wholesale prices; Demand and Price Analysis; Environmental Economics and Policy;

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  1. Olivier Desch�nes & Michael Greenstone, 2007. "The Economic Impacts of Climate Change: Evidence from Agricultural Output and Random Fluctuations in Weather," American Economic Review, American Economic Association, vol. 97(1), pages 354-385, March.
  2. Wolfram Schlenker & W. Michael Hanemann & Anthony C. Fisher, 2005. "Will U.S. Agriculture Really Benefit from Global Warming? Accounting for Irrigation in the Hedonic Approach," American Economic Review, American Economic Association, vol. 95(1), pages 395-406, March.
  3. repec:reg:wpaper:291 is not listed on IDEAS
  4. Wolfram Schlenker & W. Michael Hanemann & Anthony C. Fisher, 2006. "The Impact of Global Warming on U.S. Agriculture: An Econometric Analysis of Optimal Growing Conditions," The Review of Economics and Statistics, MIT Press, vol. 88(1), pages 113-125, February.
  5. Schnabel Hubert & Storchmann Karl, 2010. "Prices as Quality Signals: Evidence from the Wine Market," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 8(1), pages 1-23, February.
  6. Mendelsohn, Robert & Nordhaus, William D & Shaw, Daigee, 1994. "The Impact of Global Warming on Agriculture: A Ricardian Analysis," American Economic Review, American Economic Association, vol. 84(4), pages 753-71, September.
  7. John W. Haeger & Karl Storchmann, 2006. "Prices of American Pinot Noir wines: climate, craftsmanship, critics," Agricultural Economics, International Association of Agricultural Economists, vol. 35(1), pages 67-78, 07.
  8. repec:reg:rpubli:291 is not listed on IDEAS
  9. Orley Ashenfelter & Karl Storchmann, 2010. "Using Hedonic Models of Solar Radiation and Weather to Assess the Economic Effect of Climate Change: The Case of Mosel Valley Vineyards," The Review of Economics and Statistics, MIT Press, vol. 92(2), pages 333-349, May.
  10. Byron, R P & Ashenfelter, Orley, 1995. "Predicting the Quality of an Unborn Grange," The Economic Record, The Economic Society of Australia, vol. 71(212), pages 40-53, March.
  11. Orley Ashenfelter & David Ashmore & Robert LaLonde, 2004. "Bordeaux Wine Vintage Quality and Weather," Working Papers 0413, Harris School of Public Policy Studies, University of Chicago.
  12. Jones, Gregory V. & Storchmann, Karl-Heinz, 2001. "Wine market prices and investment under uncertainty: an econometric model for Bordeaux Crus Classes," Agricultural Economics, Blackwell, vol. 26(2), pages 115-133, November.
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Cited by:
  1. Ashenfelter, Orley & Storchmann, Karl, 2014. "Wine and Climate Change," Working Papers 164854, American Association of Wine Economists.
  2. Kym Anderson, 2010. "The New World in Globalizing Wine Markets: Lessons from Australia," Wine Economics Research Centre Working Papers 2010-09, University of Adelaide, Wine Economics Research Centre.

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