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The economic impacts of climate change : evidence from agricultural profits and random fluctuations in weather

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Show simple item record Deschênes, Olivier en_US Greenstone, Michael en_US
dc.contributor.other Massachusetts Institute of Technology. Center for Energy and Environmental Policy Research. en_US 2009-04-03T17:07:06Z 2009-04-03T17:07:06Z 2006 en_US
dc.identifier 2006-001 en_US
dc.description.abstract This paper measures the economic impact of climate change on US agricultural land by estimating the effect of the presumably random year-to-year variation in temperature and precipitation on agricultural profits. Using long-run climate change predictions from the Hadley 2 Model, the preferred estimates indicate that climate change will lead to a $1.1 billion (2002$) or 3.4% increase in annual profits. The 95% confidence interval ranges from -$1.8 billion to $4.0 billion and the impact is robust to a wide variety of specification checks, so large negative or positive effects are unlikely. There is considerable heterogeneity in the effect across the country with California's predicted impact equal to -$2.4 billion (or nearly 50% of state agricultural profits). Further, the analysis indicates that the predicted increases in temperature and precipitation will have virtually no effect on yields among the most important crops. These crop yield findings suggest that the small effect on profits is not due to short-run price increases. The paper also implements the hedonic approach that is predominant in the previous literature. We conclude that this approach may be unreliable, because it produces estimates of the effect of climate change that are very sensitive to seemingly minor decisions about the appropriate control variables, sample and weighting. Overall, the findings contradict the popular view that climate change will have substantial negative welfare consequences for the US agricultural sector. en_US
dc.format.extent 37, [18] p en_US
dc.publisher MIT Center for Energy and Environmental Policy Research en_US
dc.relation.ispartofseries MIT-CEEPR (Series) ; 06-001WP. en_US
dc.subject Climatic changes en_US
dc.subject Greenhouse gas mitigation en_US
dc.title The economic impacts of climate change : evidence from agricultural profits and random fluctuations in weather en_US
dc.type Working Paper en_US
dc.identifier.oclc 68723117 en_US

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