Essays on the Effect of Climate Change over Agriculture and Forestry

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2010-07-14

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In this dissertation, I study the effects of climate change on agricultural total factor productivity and crop yields and their variability. In addition, an examination was conducted on the value of select climate change adaptation strategies in forestry. Across the study, the climate change scenarios analyzed were based on the 2007 Intergovernmental Panel on Climate Change Assessment Report. Climate change impacts on the returns to research investments were examined extending the work of Huffman and Evenson (2006), incorporating climatic effects. The conjecture is that the rate of return of agricultural research is falling due to altered resource allocations and unfavorable weather conditions, arising from the early onset of climate change. This work was done using a panel model of Agricultural Total Factor Productivity (TFP) for the forty-eight contiguous states over 1970?1999. Climatic variables such as temperature and amount and intensity of precipitation were added into the model. The main results are (1) climate change affects research productivity, varying by region; (2) this effect is generally negative; (3) additional investments are needed to achieve pre-climate change TFP rates of growth; and (4) the predicted investment increases are on the order of 18%. The second inquiry involved the impact of historical climatic conditions on the statistical distributions of crop yields through mean and variability. This was done statistically, using historical yields for several crops in the US, and climate variables, with annual observations from 1960 to 2007. The estimation shows that climate change is having an effect on the first two moments of the distribution, concluding that crop yield distributions are not stationary. The implication is that risk analysis must consider means and volatility measures that depend on future climatic conditions. The analysis shows that future mean yields will increase, but volatility will also be greater for the studied crops. These results have strong implication for future crop insurance decisions. Finally, an examination was done on the value of select forestry adaptation strategies in the face of climate change. This work is motivated by the known fact that forestry sector is already heavily adapted to changing climatic conditions. Using the Forestry and Agriculture Sector Optimization Model for the United States (FASOM), I found that rotation age is the most effective adaptation strategy being worth about 60 billion dollars, while changes in species and management intensity are worth about 1.5 billion, and land use change between forestry to agriculture is worth about 200,000.

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