The economic impacts of climate change on grain production and policy implications: A CGE model analysis

Abstract

The adverse effects of extreme disasters on crop production, often assessed using crop models or field experiments, may be overestimated as these methods focus on natural impacts while ignoring the behavioral changes of farmers and international traders. This study takes barley as an example and uses GTAP model (a global economic equilibrium model) to showcase the role of the behavioral changes and to assess the economic impact of climate change on crop production after the occurrence of most extreme disasters. The results show that under RCP 8.5, the impact of extreme disasters on barley yields in China and Australia are –12% and –25.8%, respectively. After considering farmers and international traders’ behavioral change, the effects of climate change on barley production in China and Australia are reduced to –0.38% and –3.5%, respectively. Variations in production level mainly depend on the extent of farmers’ ability to expand barley sown area and the severity of government intervention in agricultural exports. In order to reduce the impact of disasters on food supply, it is necessary to give full play to the role of market mechanisms and to reduce government interventions in trade.