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.