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The Impact of Climate Change on Agriculture: Nonlinear Effects and Aggregation Bias in Ricardian Models of Farm Land Values

Carlo Fezzi and Ian Bateman
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Carlo Fezzi: Department of Economics, University of California and CSERGE (School of Environmental Sciences), University of East Anglia

No 2013.94, Working Papers from Fondazione Eni Enrico Mattei

Abstract: Ricardian (hedonic) analyses of the impact of climate change on farmland values typically assume additively separable effects of temperature and precipitation. Model estimation is implemented on data aggregated across counties or large regions. We investigate the potential bias induced by such approaches by using a large panel of farm-level data. Consistent with the literature on plant physiology, we observe significant non-linear interaction effects, with more abundant precipitation acting as a mitigating factor for increased heat stress. This interaction disappears when the same data is aggregated in the conventional manner, leading to predictions of climate change impacts which are significantly distorted.

Keywords: Climate Change; Agriculture; Ricardian Analysis; Aggregation Bias; Semi-Parametric Models (search for similar items in EconPapers)
JEL-codes: C14 C23 Q54 (search for similar items in EconPapers)
Date: 2013-11
New Economics Papers: this item is included in nep-agr and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: The Impact of Climate Change on Agriculture: Nonlinear Effects and Aggregation Bias in Ricardian Models of Farmland Values (2015) Downloads
Working Paper: The Impact of Climate Change on Agriculture: Nonlinear Effects and Aggregation Bias in Ricardian Models of Farm Land Values (2013) Downloads
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