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Land Prices and Climate Conditions - Evaluating the Greenhouse Damage for the German Agricultural Sector

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Abstract

Using an exhaustive panel dataset of the German agricultural sector, this paper is evaluating the relationship between climate conditions and land prices. The main advantage of this so-called hedonic approach is the consideration of the full range of adaptation options to the climatic environment. A Box-Cox form is employed to allow for very flexible relationships between land prices, warmth, moisture, and different socioeconomic variables. In a second step, the estimated results are used to forecast the impact of global climate change on the farming sector. The results show that a change of the temperature level has stronger impacts than a change of rainfall. Using a greenhouse warming scenario, German farmers are expected to be winners of climate change at least in the short run. Maximum gains are estimated with a temperature increase of +1.0°C against the current levels. Should the temperature increase surpass 1.8°C, however, the impact on the farming sector is clearly negative.

Suggested Citation

  • Guenter Lang, 2003. "Land Prices and Climate Conditions - Evaluating the Greenhouse Damage for the German Agricultural Sector," Discussion Paper Series 233, Universitaet Augsburg, Institute for Economics.
    • Handle: RePEc:aug:augsbe:0233
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    File URL: https://opus.bibliothek.uni-augsburg.de/opus4/files/71225/233.pdf
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    References listed on IDEAS

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    1. Fankhauser, Samuel & Smith, Joel B. & Tol, Richard S. J., 1999. "Weathering climate change: some simple rules to guide adaptation decisions," Ecological Economics, Elsevier, vol. 30(1), pages 67-78, July.
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    4. Beach, Robert H. & Thomson, Allison M. & McCarl, Bruce A., 2010. "Climate Change Impacts On Us Agriculture," 2010: Climate Change in World Agriculture: Mitigation, Adaptation, Trade and Food Security, June 2010, Stuttgart-Hohenheim, Germany 91393, International Agricultural Trade Research Consortium.
    5. Halvorsen, Robert & Pollakowski, Henry O., 1981. "Choice of functional form for hedonic price equations," Journal of Urban Economics, Elsevier, vol. 10(1), pages 37-49, July.
    6. Cropper, Maureen L & Deck, Leland B & McConnell, Kenneth E, 1988. "On the Choice of Functional Form for Hedonic Price Functions," The Review of Economics and Statistics, MIT Press, vol. 70(4), pages 668-675, November.
    7. Dixon, Bruce L. & Hollinger, Steven E. & Garcia, Philip & Tirupattur, Viswanath, 1994. "Estimating Corn Yield Response Models To Predict Impacts Of Climate Change," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 19(1), pages 1-11, July.
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    More about this item

    Keywords

    agriculture; farming land; hedonic approach; climate change; environmental valuation; global warming; impact study;
    All these keywords.

    JEL classification:

    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

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