Assessing the impacts of climate change on cereal production in Bangladesh: evidence from ARDL modeling approach

Abstract

Purpose This study aims to examine the impacts of climate change (CC), measured average annual rainfall, average annual temperature and carbon dioxide (CO2e) on cereal production (CPD) in Bangladesh by using the annual dataset from 1988–2014, with the incorporation of cereal cropped area (CCA), financial development (FD), energy consumption (EC) and rural labor force as important determinants of CPD. Design/methodology/approach This study used an auto-regressive distributive lag (ARDL) model and several econometric approaches to validate the long- and short-term cointegration and the causality directions, respectively, of the scrutinized variables. Findings Results of the bounds testing approach confirmed the stable long-term connections among the underlying variables. The estimates of the ARDL model indicated that rainfall improves CPD in the short-and long-term. However, CO2e has a significantly negative impact on CPD both in the short-and long-term. Results further showed that temperature has an adverse effect on CPD in the short-term. Among other determinants, CCA, FD and EC have significantly positive impacts on CPD in both cases. The outcomes of Granger causality indicated that a significant two-way causal association is running from all variables to CPD except temperature and rainfall. The connection between CPD and temperature is unidirectional, showing that CPD is influenced by temperature. All other variables also have a valid and significant causal link among each other. Additionally, the findings of variance decomposition suggest that results are robust, and all these factors have a significant influence on CPD in Bangladesh. Research limitations/implications These findings have important policy implications for Bangladesh and other developing countries. For instance, introduce improved cereal crop varieties, increase CCA and familiarizes agricultural credits through formal institutions on relaxed conditions and on low-interest rates could reduce the CPD’s vulnerability to climate shocks. Originality/value To the best of the authors’ knowledge, this study is the first attempt to examine the short- and long-term impacts of CC on CPD in Bangladesh over 1988–2014. The authors used various econometrics techniques, including the ARDL approach, the Granger causality test based on the vector error correction model framework and the variance decomposition method.