Impact of Climate Change on Wheat Production in Nepal

Following the Ricardian approach, this paper estimates district level fixed effect panel regression on per hectare net wheat revenues with climate variables like precipitation and temperature including other traditional inputs. Both temperature and precipitation coefficients reveal that the climate change caused negative impact on net wheat revenues from wheat production but in a decreasing rate, ceteris paribus. The joint effect of the temperature and precipitation is also significantly negative. Quite trivial that other traditional inputs like population density, manure used, human labour, wages, advanced seed and fertilizer used are positively associated with net revenues. However, per hectare bullock used and tractor price are negatively associated to net revenue. The negative sign reported for the coefficients of quadratic proxy climate change variables but positive for their level form indicate that rising temperature and precipitation initially encourage wheat production in Nepal, but after certain threshold level it start hampering the yield.