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Micro-Macro Impacts of Climate-Change on Agriculture and Food Markets

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  • Kan, Iddo
  • Kimhi, Ayal
  • Kaminski, Jonathan

Abstract

This paper develops a structural econometric model of farmland allcoation that is linked to a market-level demand model. The farmland allocation model accounts for the presence of corner solutions in land-share decisions, which enables using disaggregated data for the estimation, and thereby allows treating prices as exogenous. Under partial equilibrium in the markets of vegetative products, the integrated model is then used to simulate the impacts of climate change on production, prices, agricultural profits and consimer surplus, making explicit the production responses of the micro units used for estimating the land-use model. We apply the method to Israeli data, and obtain negative projections of farm profits and consumer's surplus driven by climate change. Importantly, the effects of climate change on farm profits are significantly smaller compared with the case in which the price-feedback effects on agricultural supply are not accounted for.

Suggested Citation

  • Kan, Iddo & Kimhi, Ayal & Kaminski, Jonathan, 2015. "Micro-Macro Impacts of Climate-Change on Agriculture and Food Markets," 2015 Conference, August 9-14, 2015, Milan, Italy 211828, International Association of Agricultural Economists.
  • Handle: RePEc:ags:iaae15:211828
    DOI: 10.22004/ag.econ.211828
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    File URL: http://ageconsearch.umn.edu/record/211828/files/Kan-Micro-Macro%20Impacts%20of%20Climate-Change%20on%20Agriculture%20and%20Food%20Markets-212.pdf
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    References listed on IDEAS

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    3. Kimhi, Ayal, 2010. "Does Rural Household Income Depend on Neighboring Communities? Evidence from Israel," Discussion Papers 93134, Hebrew University of Jerusalem, Department of Agricultural Economics and Management.
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    Keywords

    Agricultural and Food Policy; Environmental Economics and Policy; Food Consumption/Nutrition/Food Safety;

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