July 26, 2017

The IPCC Investment Numbers Are Correct

A comment to a paper published by Energy Policy arguing that investment data reviewed by Chapter 16 of the IPCC Working Group III Fifth Assessment Report - which I co-authored - was totally flawed.



Abstract: Trainer (2017) criticizes cost estimates of climate change mitigation presented in the Working Group III Report to the IPCC and is concerned by lack of transparency and dubious practices in summarizing the literature. This commentary shows that this critique is based on several mistakes. Trainer (2017) mixes evidence on investment changes and evidence on macroeconomic costs, which are discussed in two different parts of the report because they are different indicators of the economic impact of climate mitigation policy. This commentary also argues that when the report was prepared evidence on investments in mitigation technologies was limited but methodologically sound and transparently reported, contrary to what suggested in Trainer (2017).

Massetti, E., C. Carraro, S. Gupta, J. Harnish and R.J. Kopp. 2017. “Investments in and Macroeconomic Costs of Climate Mitigation in the Working Group III Contribution to the Fifth Assessment Report of the IPCC.” Energy Policy, 109: 414–417.

July 12, 2017

Impacts of Climate Change on Italian Agriculture

Paper on climate change impact on Italian farms is forthcoming in the European Review of Agricultural Economics.


Abstract: This research investigates the potential impact of warming on Italian agriculture. Using a detailed dataset of 16,000 farms across Italy, the study examines likely warming impacts in different regions and for different sectors of Italian agriculture. The study finds that farm net revenues are very sensitive to seasonal changes in temperature and precipitation. Livestock and crop farms have different responses to climate as do rainfed farms and irrigated crop farms. The overall results suggest mild consequences from marginal changes in climate but increasingly harmful effects from more severe climate scenarios.


Bozzola, M., E. Massetti, R. Mendelsohn and F. Capitanio. 2017. “A Ricardian Analysis of the Impact of Climate Change on Italian Agriculture.” European Review of Agricultural Economics, forthcoming.

October 06, 2016

Paper on degree days forthcoming in Energy Economics

How Well Do Degree Days over the Growing Season Capture the Effect of Climate on Farmland Values?

Emanuele Massetti, Robert Mendelsohn, Shun Chonabayashi

Abstract

Farmland values have traditionally been valued using seasonal temperature and precipitation but degree days over the growing season offers a more compact form. We find that degree days and daily temperature are interchangeable over the growing season. However, the impact of degree days in spring and summer are quite different. Climate effects outside the growing season are also significant. Cross sectional evidence suggests seasonal temperature and precipitation are very important whereas temperature extremes have relatively small effects.


January 05, 2016

How do heat waves, cold waves, droughts, hail and tornadoes affect US agriculture?

A very first draft of a new paper on climate extremes available here. Still preliminary and incomplete.

Presented today at the ASSA meetings in San Francisco. Presentation available here.

Abstract:

We estimate the impact of extreme events on corn and soybeans yields, and on agricultural land values in the Eastern United States. We find the most harmful event is a severe drought but that cold waves, heat waves, and storms all reduce both corn and soybean yields. Over 80% of the damage from extreme events is caused by droughts and cold waves with heat waves causing only 6% of the damage. Including extreme events in a panel model of weather alters how temperature affects yields, making cold temperature more harmful and hot temperatures less harmful. Extreme events have no effect on farmland values probably because American farmers are buffered from extreme events by subsidized public crop insurance.

December 03, 2015

How Well Do Degree Days over the Growing Season Capture the Effect of Climate on Farmland Values?

Totally new draft of paper on degree days:

This paper presents an analytical framework to study the economics of adaptation to climate change, reviews the alternative methodologies that have been used to measure adaptation, and briefly summarizes the empirical results. The paper concludes with some general guidance for policy makers on climate adaptation and with some observations of promising areas for additional research.

November 29, 2015

New draft: "Migration and Climate Change in Rural Africa"

Climate change is expected to severely affect people’s livelihoods through, among others, rising temperatures and changing precipitation patterns. Here we show that average temperature and precipitations significantly affect migration decisions of farm households in Ghana and Nigeria. We find that farmers that live in the least favorable climates for agriculture have the lowest propensity to migrate among all farm households. As climatic conditions worsen, farm households are likely to migrate less. Our result are consistent with the widely accepted conclusions of two large bodies of literature which have been only marginally connected before. Many migration studies suggest that lower incomes and lower assets reduce migration rates in developing countries. There is also general agreement that climate change will reduce agricultural productivity in low-latitude developing countries. Taken together, these two streams of literature, lead to assume that climate change, especially in areas that will become less hospitable but not uninhabitable, could reduce migration rates. In the literature this is known as the environmental-capital hypothesis, whereby increased productivity due to better conditions provides the capital to finance costly migration, while a worsening in the climate could be associated with lower chances of migration.


Cattaneo, C. and E. Massetti. 2015. “Climate and Migration in Rural Ghana and Nigeria.”

November 11, 2015

The economics of adaptation to climate change

This paper presents an analytical framework to study the economics of adaptation to climate change, reviews the alternative methodologies that have been used to measure adaptation, and briefly summarizes the empirical results. The paper concludes with some general guidance for policy makers on climate adaptation and with some observations of promising areas for additional research.


Massetti, E. and R. Mendelsohn. 2015. "The Economics of Adaptation to Climate Change"

October 29, 2015

Using Cross-Sectional Analysis to Measure the Impact of Climate on Agriculture

This paper examines the strengths and weaknesses of using cross-sectional methods to study climate impacts on agriculture. The paper addresses concerns about missing variable bias, irrigation, prices, and carbon fertilization. The paper then reviews the predicted marginal climate impacts of cross-sectional Ricardian models from around the world. The qualitative results are quite similar to findings from agro-economic models. The quantitative results suggest a hill-shaped relationship with respect to both temperature and precipitation. This implies warming will be especially harmful in the low latitudes but possibly beneficial in the mid to high latitudes. The impacts vary between rainfed and irrigated farms and between crop and livestock farms. The expected damage from warming for the next century on global production is about the same magnitude as the likely benefit of carbon fertilization.

Mendelsohn, R. and E. Massetti. 2015. "Using Cross-Sectional Analysis to Measure the Impact of Climate on Agriculture"

October 15, 2015

Local Pollution and Carbon Pricing

This paper presents economic benefit estimates of air quality improvements in Europe that occur as a side effect of GHG emission reductions. We consider two climate policy scenarios from two Representative Concentration Pathways (RCPs), in which radiative forcing levels are reached in 2100. The policy tool is a global uniform tax on all GHG emissions in the Integrated Assessment Model WITCH. The resulting consumption patterns of fossil fuels are used to estimate the physical impacts and the economic benefits of pollution reductions on human health and on key assets by implementing the most advanced version of the ExternE methodology with its Impact Pathway Analysis. The mitigation scenario compatible with +2°C (RCP 2.6) reduces total pollution costs in Europe by 84%. Discounted cumulative ancillary benefits are equal to about €1.7 trillion between 2015 and 2100, or €17 per abated tonne of CO2 in Europe. The less strict climate policy scenario (RCP 4.5) generates benefits equal to €15.5 per abated tonne of CO2. Without discounting, the ancillary benefits are equal to €51 (RCP 2.6) and €46 (RCP 4.5) per tonne of CO2 abated. For both scenarios, the local benefits per tonne of CO2 decline over time and vary significantly across countries.

Ščasný, M., E. Massetti, J. Melichar and S. Carrara. 2015. “The ancillary benefits of the Representative Concentration Pathways on Air Quality in Europe.” Environmental and Resource Economics, 62(2): 383-415.

July 21, 2015

Did farmers in the Eastern US adapt to climate change?

Better ask first if climate has changed in the Eastern US.

A note on the the long-difference method – Burke and Emerick (2013)

Burke andEmerick (2013) study if corn and soybeans growers in the Eastern US have adapted to climate change from 1980 to 2000. Instead of climate they consider five-year weather and crop yield averages from 1978 to 1982 and from 1998 to 2002. For each county they calculate the differences of average yields between the five-year averages centered on 1980 and 2000 and regress it on the difference between 1980 and 2000 of the average number of degree days below and above 29 °C during April-September. They find that the coefficient of degree days above 29 °C is negative and significant, as expected. However, the coefficient is not significantly different from the coefficient estimated using a traditional panel model with fixed effect. It thus seems that the response function of yields is the same whether it is estimated using weather fluctuations or longer term temperature changes. They argue this is evidence of lack of adaptation.

I argue instead that this is just what one would expect to observe. Because climate has not changed in the Eastern US. Burke and Emerick (2013) captures noisy weather signals rather than a stable climate pattern.

See here for a longer discussion, references to the scientific literature and maps of climate patterns in the Eastern US.