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Modelling Agricultural Production Risk and the Adaptation to Climate Change

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  • Finger, Robert
  • Schmid, Stéphanie

Abstract

A model that integrates biophysical simulations in an economic model is used to analyze the impact of climate change on crop production. The biophysical model simulates future plant-management-climate relationships and the economic model simulates farmers’ adaptation actions to climate change using a nonlinear programming approach. Beyond the development of average yields, special attention is devoted to the impact of climate change on crop yield variability. This study analyzes corn and winter wheat production on the Swiss Plateau with respect to climate change scenarios that cover the period of 2030-2050. In our model, adaptation options such as changes in seeding dates, changes in production intensity and the adoption of irrigation farming are considered. Different scenarios of climate change, output prices and farmers’ risk aversion are applied in order to show the sensitivity of adaptation strategies and crop yields, respectively, on these factors. Our results show that adaptation actions, yields and yield variation highly depend on both climate change and output prices. The sensitivity of adaptation options and yields, respectively, to prices and risk aversion for winter wheat is much lower than for corn because of different growing periods. In general, our results show that both corn and winter wheat yields increase in the next decades. In contrast to other studies, we find the coefficient of variation of corn and winter wheat yields to decrease. We therefore conclude that simple adaptation measures are sufficient to take advantage of climate change in Swiss crop farming.

Suggested Citation

  • Finger, Robert & Schmid, Stéphanie, 2007. "Modelling Agricultural Production Risk and the Adaptation to Climate Change," MPRA Paper 3943, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:3943
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    References listed on IDEAS

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    1. John M. Antle & Susan M. Capalbo, 2001. "Econometric-Process Models for Integrated Assessment of Agricultural Production Systems," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(2), pages 389-401.
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    3. Finger, Robert & Hediger, Werner, 2007. "The Application of Robust Regression to a Production Function Comparison – the Example of Swiss Corn," MPRA Paper 4740, University Library of Munich, Germany.
    4. Murat Isik & Stephen Devadoss, 2006. "An analysis of the impact of climate change on crop yields and yield variability," Applied Economics, Taylor & Francis Journals, vol. 38(7), pages 835-844.
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    6. Fuhrer, Jurg & Beniston, Martin & Calanca, Pierluigi & Torriani, Daniele Simone, 2007. "Alternative Hedging Strategies in Maize Production to Cope with Climate Variability and Change," 101st Seminar, July 5-6, 2007, Berlin Germany 9275, European Association of Agricultural Economists.
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    Cited by:

    1. Bardsley, Douglas K. & Bardsley, Annette M., 2014. "Organising for socio-ecological resilience: The roles of the mountain farmer cooperative Genossenschaft Gran Alpin in Graubünden, Switzerland," Ecological Economics, Elsevier, vol. 98(C), pages 11-21.
    2. repec:eme:afrpps:afr-11-2016-0082 is not listed on IDEAS
    3. Benjamin Dequiedt & Emmanuel Servonnat, 2016. "Risk as a limit or an opportunity to mitigate GHG emissions? The case of fertilisation in agriculture," Working Papers 1606, Chaire Economie du climat.
    4. Altvater, Susanne & de Block, Debora & Bouwma, Irene & Dworak, Thomas & Frelih-Larsen, Ana & Görlach, Benjamin & Hermeling, Claudia & Klostermann, Judith & König, Martin & Leitner, Markus & Marinova, , 2012. "Adaptation measures in the EU: Policies, costs, and economic assessment. "Climate Proofing" of key EU policies," ZEW Expertises, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research, number 110558.
    5. Ines Kapphan & Pierluigi Calanca & Annelie Holzkaemper, 2012. "Climate Change, Weather Insurance Design and Hedging Effectiveness," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 37(2), pages 286-317, April.
    6. Markus Lips & Robert Finger & Pierluigi Calanca, 2008. "Potenzielle Auswirkungen des Klimawandels auf Risiko und Kosten der Weizenernte," Journal of Socio-Economics in Agriculture (Until 2015: Yearbook of Socioeconomics in Agriculture), Swiss Society for Agricultural Economics and Rural Sociology, vol. 1(1), pages 219-323.
    7. Finger, Robert, 2010. "Evidence of slowing yield growth - The example of Swiss cereal yields," Food Policy, Elsevier, vol. 35(2), pages 175-182, April.
    8. Finger, Robert & Gerwig, Claude N., 2007. "The Impact of Climate Change on the Profitability of Site Specific Technologies," MPRA Paper 4792, University Library of Munich, Germany.
    9. Finger, Robert, 2012. "Nitrogen use and the effects of nitrogen taxation under consideration of production and price risks," Agricultural Systems, Elsevier, vol. 107(C), pages 13-20.
    10. Paunić, Alida, 2016. "Brazil, Preservation of Forest and Biodiversity," MPRA Paper 71462, University Library of Munich, Germany.
    11. -, 2011. "An assessment of the economic impact of climate change on the agriculture sector in Trinidad And Tobago," Sede Subregional de la CEPAL para el Caribe (Estudios e Investigaciones) 38587, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    12. Finger, Robert, 2011. "Reductions of Agricultural Nitrogen Use Under Consideration of Production and Price Risks," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114356, European Association of Agricultural Economists.
    13. Mulwa, Chalmers & Marenya, Paswel & Rahut, Dil Bahadur & Kassie, Menale, 2015. "Response to Climate Risks among Smallholder Farmers in Malawi: A Multivariate Probit Assessment of the Role of Information, Household Demographics and Farm Characteristics," 2015 Conference, August 9-14, 2015, Milan, Italy 212511, International Association of Agricultural Economists.
    14. Lehmann, Niklaus & Finger, Robert & Klein, Tommy & Calanca, Pierluigi & Walter, Achim, 2012. "Adapting Towards Climate Change: A Bioeconomic Analysis of Winterwheat and Grain Maize," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126483, International Association of Agricultural Economists.
    15. Lehmann, Niklaus & Finger, Robert & Klein, Tommy & Calanca, Pierluigi & Walter, Achim, 2013. "Adapting crop management practices to climate change: Modeling optimal solutions at the field scale," Agricultural Systems, Elsevier, vol. 117(C), pages 55-65.
    16. Meyer-Aurich, Andreas & Gandorfer, Markus & Trost, Benjamin & Ellmer, Frank & Baumecker, Michael, 2016. "Risk efficiency of irrigation to cereals in northeast Germany with respect to nitrogen fertilizer," Agricultural Systems, Elsevier, vol. 149(C), pages 132-138.
    17. Hutchinson, Sharon & Gomes, Charmaine & Alleyne, Dillon & Phillips, Willard, 2013. "An assessment of the economic and social impacts of climate change on the agriculture sector in the Caribbean," Sede Subregional de la CEPAL para el Caribe (Estudios e Investigaciones) 38278, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    18. Heuson, Clemens & Gawel, Erik & Gebhardt, Oliver & Hansjürgens, Bernd & Lehmann, Paul & Meyer, Volker & Schwarze, Reimund, 2012. "Fundamental questions on the economics of climate adaptation: Outlines of a new research programme," UFZ Reports 05/2012, Helmholtz Centre for Environmental Research (UFZ).
    19. Heuson, Clemens & Gawel, Erik & Gebhardt, Oliver & Hansjürgens, Bernd & Lehmann, Paul & Meyer, Volker & Schwarze, Reimund, 2012. "Ökonomische Grundfragen der Klimaanpassung: Umrisse eines neuen Forschungsprogramms," UFZ Reports 02/2012, Helmholtz Centre for Environmental Research (UFZ).
    20. Ulf Römer & Oliver Musshoff, 2018. "Can agricultural credit scoring for microfinance institutions be implemented and improved by weather data?," Agricultural Finance Review, Emerald Group Publishing, vol. 78(1), pages 83-97, February.
    21. Ken Mix & Vicente Lopes & Walter Rast, 2012. "Growing season expansion and related changes in monthly temperature and growing degree days in the Inter-Montane Desert of the San Luis Valley, Colorado," Climatic Change, Springer, vol. 114(3), pages 723-744, October.
    22. Finger, Robert, 2012. "Modeling the sensitivity of agricultural water use to price variability and climate change—An application to Swiss maize production," Agricultural Water Management, Elsevier, vol. 109(C), pages 135-143.

    More about this item

    Keywords

    climate change; robust estimation; yield variation; corn; winter wheat; market liberalization;

    JEL classification:

    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics

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