Preliminary indications of the negative effects of climate change on the West Coast wine industry's performance

Western Cape agriculture's strong TFP growth over the second half of the twentieth century is explained by access to irrigation water. Drier conditions are predicted for the western escarpment, a region severely affected by the current drought. The SA wine industry is not flourishing for many reasons that potentially include climate change. This study examines longitudinal data for twenty West Coast farms to establish if there has been an invisible drying trend prior to the current drought which could explain these farms' performance. The two models fitted agree on falling productivity over the period 2005-2015. Battese and Coelli's (1992) error components model cannot distinguish between general Hicks neutral technical collapse and specific farms falling behind. Battese and Coelli's (1995) technical efficiency effects model confirms technical collapse and the contribution of water to productivity. Dryland production is most vulnerable and although regions differ, there is no evidence of specific farms falling behind. The dataset is limited in scope and the frontier preliminary, but this study demonstrates how easily climate change effects can be monitored. One of the most important responses to the current drought will be to systematically evaluate study group data to quantify its impact on productivity. Keywords: Wine industry, climate change mitigation, stochastic production frontier, convergence