The impact of climate change on agriculture: Nonlinear effects and aggregation bias in Ricardian models of farmland values

Carlo Fezzi, Ian Bateman

Research output: Contribution to journalArticlepeer-review

41 Citations (Scopus)
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Abstract

Ricardian (hedonic) analyses of the impact of climate change on farmland values typically assume additively separable effects of temperature and precipitation with model estimation being implemented on data aggregated across counties or large regions. We use a large panel of farm-level data to investigate the potential bias induced by such approaches. 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.
Original languageEnglish
Pages (from-to)57-92
Number of pages36
JournalJournal of the Association of Environmental and Resource Economists
Volume2
Issue number1
DOIs
Publication statusPublished - Mar 2015

Keywords

  • Climate Change
  • Agriculture
  • Ricardian Analysis
  • Aggregation Bias
  • Semi-parametric models

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