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The distributional impact of climate change:Why food prices matter

Eshita Gupta (), Bharat Ramaswami () and E. Somanathan
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Eshita Gupta: TERI University
Bharat Ramaswami: Indian Statistical Institute, Delhi

Discussion Papers from Indian Statistical Institute, Delhi

Abstract: We develop a simple two-sector (food and non-food) general equilibrium model for studying the long-run impact of climate change on food prices and the distribution of welfare in India. We find that food prices were 4 to 8 percent higher and the real income of the landless was 2.4 to 4.8 percent lower in 2009 relative to a counterfactual without climate change and pollution (over the past three decades). Contrary to popular belief, nearly all farmers lose from climate change that causes higher food prices. In 2030, if agricultural productivity is 7% lower compared to a scenario without further climate impacts, then food prices will be 3.6 to 10.8 percent higher and the real income of the landless 1.6 to 5.6% lower. The lower numbers are obtained in open economy scenarios and the higher in closed economy scenarios, showing that trade is very important in protecting the poor. If the economy is closed, then improving the productivity of the agricultural sector has the greatest impact on the welfare of the poor. In contrast, if the economy is open and there are no barriers to labor movement out of agriculture, then the non-agricultural sector plays a bigger role in driving the welfare of the poor than mitigation of climate change

Keywords: Equity; Transfer; Pupil Teacher Ratio; Primary Schooling; India (search for similar items in EconPapers)
JEL-codes: O13 O53 Q54 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2017-01
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Working Paper: The Distributional Impact of Climate Change: Why Food Prices Matter (2021) Downloads
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