Introduction to estimates of climate change impacts Emanuele Massetti FEEM and CMCC Capacity Building Programme on the Economics of Adaptation 2 nd Regional.

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Presentation transcript:

Introduction to estimates of climate change impacts Emanuele Massetti FEEM and CMCC Capacity Building Programme on the Economics of Adaptation 2 nd Regional Training Workshop Agenda Bangkok, 30 September – 4 October

Outline Brief introduction to the Ricardian Method Hands-on with Excel – Data Example – Functional forms – Marginal impacts – Absolute impacts – Sums across total farmland – Sums across

Ricardian method Land values reflect present and future (expected) productivity of land Analysis of data on agricultural land values and climate – Data from a “cross-section” with different land values and different climate Estimates of the value of climate used to infer the impact of climate change

Land value and climate Climate Variable Value of Land Source: Mendelsohn, Nordhaus and Shaw (AER, 1994) 4

Example: data FarmerAnnual mean temperature (°C)Value of land ($/hectare) A B C D E F G H I Assumption: one hectare of land for each farmer

Functional forms

ObservedLinearQuadratic T Land Value Predicted land value Difference Difference squared Predicted land value Difference Difference squared A B C D E F G H I

Marginal value of temperature

Impact of +2°C Observed Predicted (Temperature) Predicted (Land Values) Temp. Land Value ($/ha) Land (ha) Total Land Value ($) Temp. Change New Temp. Land value ($/ha) Land values with +2°C ($/ha) Impact of +2°C (total) A B C D E F G H I Total3812Total Impact ($)7 Impact (%)0.2%

Impact of +2°C with different farmland Observed Predicted (Temperature) Predicted (Land Values) Temp. Land Value ($/ha) Land (ha) Total Land Value ($) Temp. Change New Temp. Land value ($/ha) Land values with +2°C ($/ha) Impact of +2°C (total) A B C D E F G H I Total120040Total Impact ($)-8424 Impact (%)-7.0%

Impact of local temp. change Observed Predicted (Temperature) Predicted (Land Values) Temp. Land Value ($/ha) Land (ha) Total Land Value ($) Temp. Change New Temp. Land value ($/ha) Land values with +2°C ($/ha) Impact of +2°C (total) A B C D E F G H I Total3812Total Impact ($)-24 Impact (%)-0.6%

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