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Estimating the impact of climate change on agricultural production: accounting for technology heterogeneity across countries

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  • Andreas Exenberger
  • Andreas Pondorfer
  • Maik Wolters

Abstract

We estimate the impact of climate change on agricultural production in a panel of 127 countries from 1961 to 2002. In contrast to the existing literature we account for cross-sectional dependence and technology heterogeneity. We find no significant impact of climate change on agricultural production in high income countries, but significant adverse effects in middle and low income countries. These adverse effects include a moderate negative impact of increases in temperature on agricultural output and for low income countries also negative effects of reductions in precipitation and of increases in the frequency of droughts. The latter two effects are particularly strong in Sub-Sahara Africa where low-tech rain-fed agriculture with very limited climate change adjustment capacities dominates. Thus, our findings reinforce the importance of proper adaptation strategies to climate change considering heterogeneous production technologies across countries

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File URL: https://www.ifw-members.ifw-kiel.de/publications/estimating-the-impact-of-climate-change-on-agricultural-production-accounting-for-technology-heterogeneity-across-countries/CCE_Climate_final_KWP%201920.pdf
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Bibliographic Info

Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1920.

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Length: 27 pages
Date of creation: Apr 2014
Date of revision:
Handle: RePEc:kie:kieliw:1920

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Keywords: agricultural production; climate change; panel data; cross-sectional dependence; parameter heterogeneity; common correlated effects estimator;

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  1. Fulginiti, Lilyan E. & Perrin, Richard K. & Yu, Bingxin, 2003. "Institutions And Agricultural Productivity In Sub-Sahara Africa," 2003 Annual Meeting, August 16-22, 2003, Durban, South Africa, International Association of Agricultural Economists 25818, International Association of Agricultural Economists.
  2. Im, Kyung So & Pesaran, M. Hashem & Shin, Yongcheol, 2003. "Testing for unit roots in heterogeneous panels," Journal of Econometrics, Elsevier, Elsevier, vol. 115(1), pages 53-74, July.
  3. M. Hashem Pesaran, 2007. "A simple panel unit root test in the presence of cross-section dependence," Journal of Applied Econometrics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 22(2), pages 265-312.
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  5. Pesaran, M.H. & Smith, R., 1992. "Estimating Long-Run Relationships From Dynamic Heterogeneous Panels," Cambridge Working Papers in Economics, Faculty of Economics, University of Cambridge 9215, Faculty of Economics, University of Cambridge.
  6. M. Hashem Pesaran, 2006. "Estimation and Inference in Large Heterogeneous Panels with a Multifactor Error Structure," Econometrica, Econometric Society, Econometric Society, vol. 74(4), pages 967-1012, 07.
  7. Gutierrez, Michele Mario & Gutierrez, Luciano, 2003. "International R&D Spillovers And Productivity Growth In The Agricultural Sector. A Panel Cointegration Approach," 2003 Annual Meeting, August 16-22, 2003, Durban, South Africa, International Association of Agricultural Economists 25884, International Association of Agricultural Economists.
  8. Dinar, A. & Mendelsohn, R. & Evenson, R. & Parikh, J. & Sanghi, A. & Kumar, K. & McKinsey, J. & Lonergen, S., 1998. "Measuring the Impact of CLimate Change on Indian Agriculture," Papers, World Bank - Technical Papers 402, World Bank - Technical Papers.
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  10. Kapetanios, G. & Pesaran, M. Hashem & Yamagata, T., 2011. "Panels with non-stationary multifactor error structures," Journal of Econometrics, Elsevier, Elsevier, vol. 160(2), pages 326-348, February.
  11. Barbara J. Craig & Philip G. Pardey & Johannes Roseboom, 1997. "International Productivity Patterns: Accounting for Input Quality, Infrastructure, and Research," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 79(4), pages 1064-1076.
  12. 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, American Economic Association, vol. 97(1), pages 354-385, March.
  13. Mendelsohn, Robert & Nordhaus, William D & Shaw, Daigee, 1994. "The Impact of Global Warming on Agriculture: A Ricardian Analysis," American Economic Review, American Economic Association, American Economic Association, vol. 84(4), pages 753-71, September.
  14. Salvador Barrios & Luisito Bertinelli & Eric Strobl, 2010. "Trends in Rainfall and Economic Growth in Africa: A Neglected Cause of the African Growth Tragedy," The Review of Economics and Statistics, MIT Press, vol. 92(2), pages 350-366, May.
  15. Kao, Chihwa, 1999. "Spurious regression and residual-based tests for cointegration in panel data," Journal of Econometrics, Elsevier, Elsevier, vol. 90(1), pages 1-44, May.
  16. Hayami, Yujiro & Ruttan, Vernon W, 1970. "Agricultural Productivity Differences Among Countries," American Economic Review, American Economic Association, American Economic Association, vol. 60(5), pages 895-911, December.
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