Thursday, 24 November 2016

The impacts of climate change on the world food market: Mid-term analysis using International Food and Agricultural Policy Simulation Model (IFPSIM)

Global warming caused by concentration of carbon dioxide in the atmosphere will be a major issue in world food markets over the next century. Agricultural production will be affected by climate change, such as rising temperatures or droughts, mainly through changes in crop yields. Environmental changes in a particular country or region will affect agricultural production in other countries or regions indirectly through the trade of food products. Thus, it is likely that climate changes, such as global warming, will cause drastic changes in agricultural markets. This research examines the possible impacts of global warming on world agricultural product markets using IFPSIM, the world food model of JIRCAS.

  Rainfall and temperature affect crop production. It is assumed that only yield is affected by these climatic variables. The following double-log form yield function is estimated as lnYH t = a + b 1T + b ln PRC t + b3lnTMPt , where YH is yield, T is the time trend, PRC is rainfall measured in millimeters, and TMP is temperature measured in degrees Celsius. The difference function is estimated if the probability that the yield data is non-stationary is higher than ten percent.
  The rainfall and temperature data are the average values from the Global Historical Climatology Network (GHCN). The climate variables are based on monthly data on the flowering or silking season of each crop. The year term of the estimation period is from 1961 to 2000. Large countries are divided into regions based on the cropping map. The crops in the model are wheat, maize, other coarse grains, rice, and soybeans. The other coarse grains include barley, rye, oats, millet, and sorghum. The yield and production data for each crop is that of Food and Agriculture Organization of the United Nations (FAO)-STAT. The base year of the simulation is 1998 and the term of the projection is from the base year to 2025.

  The assumptions of the simulation are as follows: (1) the cropping calendar is fixed, (2) the area available for cropping is fixed, (3) the climatic variables directly affect only yields, (4) the temperature measured in degrees Celsius of all countries and regions increases 0.05% per year, and (5) all other parameters are fixed.

  Table 1 shows the results of the estimation. The parameters are the elasticities of yield for rainfall and temperature. The results show that rainfall has a significantly positive effect on the production of maize and other coarse grains. On the other hand, higher temperatures have a negative effect on the production of most crops except for rice. Figs. 1 and 2 show that the growth rates of production in different countries between 2005 and 2025. Wheat production in the USA will increase due to falling production in other countries. The production of rice in the USA will sharply decrease while that in Japan, South Korea, and many developing countries will increase. Fig. 2 shows that the world production of most farm commodities will not be severely affected by high temperatures, even though each country will be affected by climate change. This is because the sign of elasticity is different for each country, as seen in Table 1. Rice production, however, will be significantly affected by climate change, largely because of the sharp drop in rice yields and production in the USA and South Asian countries.

  While the scenario is fairly simple (temperature increases 0.05% per year for all countries, or about 0.2 ˚C over the next twenty years), drastic changes in crop production are seen in some countries. Countries that suffer severe damage due to higher temperatures may need to consider changes in cropping patterns and practices.         

(J. Furuya)

Table 1. Elasticity of yields for climatic variables.

Table 1. Elasticity of yields for climatic variables.
Fig. 1. Growth rate of production in the USA.
Fig. 1. Growth rate of production in the USA.

Fig. 2. World growth rate of production.

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