Structural Analysis of Climate Change Impacts on Agriculture under Partial Equilibrium

Iddo Kan (), Ayal Kimhi and Jonathan Kaminski

No 290019, Discussion Papers from Hebrew University of Jerusalem, Department of Agricultural Economics and Management

Abstract: This paper develops an econometric-based structural model of farmland allocation that is based on an explicit formulation of farm profit and production functions, and hence can be linked to a market-level demand model. The model accounts for the presence of corner solutions in land share decisions; this enables using disaggregated data for the estimation, and thereby allows treating prices as exogenous. The integrated model enables assessing the impact of climate change on agriculture under partial equilibrium in the markets of vegetative products, while incorporating the production responses of the micro units used for estimating the land-use model. We apply the method to Israeli data, and obtain simulated adverse effects of climate change on farm profits. These effects are considerably lower compared to the case in which the price-feedback effects on agricultural supply are overlooked.

Keywords: Environmental Economics and Policy; Industrial Organization; Land Economics/Use (search for similar items in EconPapers)
Pages: 42
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:ags:huaedp:290019

DOI: 10.22004/ag.econ.290019

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