The potential benefits of agricultural adaptation to warming in China in the long run

Understanding the extent to which agriculture can adapt to climate change and the determinants of farmers' adaptive capacity are of paramount importance from a policy perspective. Based on household survey data from a large sample in rural China, the present article adopts a panel approach to estimate the potential benefits of long-run adaptation and to identify the determinants of farmers' adaptive capacity. The empirical results suggest that, for various model settings and climate change scenarios, long-run adaptations should mitigate one-third to one-half of the damages of warming on crop profits by the end of this century. These findings support the basic argument of the hedonic approach that omitting long-run adaptations will dramatically overestimate the potential damage of climate change. The paper also finds that household-level capital intensity and farmland size have significant effects on farmers' adaptive capacities.