1. Integrating Climate Predictions and Ricardian Results
Accra 2012

2. Linear Ricardian Model
NR=b0 +b1T+b2T2 +b3P+b4P2
Marginal calculation
dNR/dT=b1+2b2T
dNR/dP=b3+2b4P
For each district, different value of T and P
Therefore different marginal values

3. Loglinear Ricardian Model
Log(NR)=b0 +b1T+b2T2 +b3P+b4P2
Marginal calculation
dlog(NR)/dT=(dNR/NR)/dT=b1+2b2T
dlog(NR)/dP=(dNR/NR)/dP=b3+2b4P
Measures percentage change in NR
For each district, different value of T and P
Therefore different marginal values

4. Climate Prediction
Climate model predicts change in temperature (ΔT) and percentage change in precipitation (Δ%P) in specific year and place

5. Use Model to Predict Change in Net Revenue
Estimate initial net revenue
NR0=∑Li * (b0 +b1T0 +b2T02+ b3P0 +b4P02)
Estimate future net revenue
NR1=∑Li * (b0 +b1T1 +b2T12+ b3P1 +b4P12)
Change in net revenue
ΔNR=NR1-NR0