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GTAP Resource #7220

"Estimating the Impact of Climate Change on Agricultural TFP"
by Thomas, Timothy, Channing Arndt, Uchechukwu Jarrett and Hamid Mohtadi

Recent publications on the historical implications of climate change for agricultural TFP – and on GDP -- have found strong impacts. Large, negative impacts are important for the simulation modeling community because they should, if confirmed, suggest that currently there are understated likely future impacts by some combination of ignoring important impact channels or failing to appreciate the true magnitude of impact within included impact channels. In this paper we examine more carefully a model on which the recent publications are based, proposing an important modification, and critiquing the applications of this model in the noted papers.

While the model applies to both GDP and TFP, we focus empirically on agricultural TFP. Using two possible impact channels of climate on TFP/GDP, we test for their presence in a model which incorporates both, and then in subsequent regressions, estimate the magnitude of the impact of climate change with only the effect that is statistically significant. Using a flexible functional form, which reduces the bias that is usually imposed by researchers in choosing a linear or quadratic response function, we find that there is no statistically significant long-run (growth) effect of temperature or precipitation on TFP. We also find that while there is a short-run (level) effect of temperature, it occurs only in some temperature ranges and has resulted in a 1 percent reduction in average global agricultural TFP between 1976 and 2015. Finally, when the sample is split in half by income level, on average the higher-income countries show a large and negative long-run (growth) temperature effect on TFP while the lower-income countries have no long-run effect of temperature or precipitation and but do have a small negative short-run (level) effect.

Resource Details (Export Citation) GTAP Keywords
Category: 2024 Conference Paper
Status: Not published
By/In: Presented during the 27th Annual Conference on Global Economic Analysis (Fort Collins, Colorado, USA)
Date: 2024
Created: Thomas, T. (4/12/2024)
Updated: Thomas, T. (4/12/2024)
Visits: 74
- Climate change policy
- Climate impacts
- Economic development
- Economic growth
- Econometric methods
- Global

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