The Impact of Climate Change on the Brazilian Agriculture: A Ricardian Study at Microregion Level

Abstract

We use at microregion level from the Brazilian Census years 1975, 1985, 1995 and 2006 to assess the impact of climate change on Brazilian agriculture using a Ricardian model. We estimate the Ricardian model using repeated cross sections for each Census Year, a pooled model and a two-stage model based on Hsiao 2003. Results show that a marginal increase of temperature is harmful for agriculture in all regions of Brazil, with the exception of the South. The most negative impacts are felt in the North and in the North-East. There is mixed evidence on the effect of a marginal impact of precipitation. Additional rainfall is beneficial in South, South-East and in the Center-West. It is harmful in other regions. Impact estimates with three GCM scenarios generated using the A2 SRES emission scenario show that climate change is expected to be generally harmful in 2060. In 2100 only the climate change scenario generated by the Hadley HADCM3 model predicts negative impacts; the MIMR model predicts that climate change will not significantly affect land values while the NCPCM model predicts significant beneficial effects using the Hsiao model and non-significant beneficial effects using the pooled model. Among Brazilian regions, only the South and some cases the South-East are expected to benefit from climate change.