Modeling the Direct Effect of Climate Change on the Cereal Production in Tunisia: A Micro-spatial Panel Cointegration Analysis

Abstract

Unlike previous studies, this paper, by employing a cointegration technique on panel data, economically investigates the direct effect of climate change on the cereal production in the long-term via a new cereal disaggregated databases covering the period 1979-2012 for 24 governorates in Tunisia within a multivariate panel framework. The Pedroni (1999, 2004) panel cointegration test indicates that there is a long-run equilibrium relationship between the considered variables with elasticities estimated positive and statistically significant in the long-run. The results generally confirm that in the long term there is a strong positive correlation between the cereal production and the direct effect of precipitation and temperature for the whole panel. At the micro-spatial level, results of the long-run equilibrium relationship show that the cereal production is extremely dependent on rainfall in most governorates of cereals producers, especially the Northwest region of Tunisia. In fact, there are several initiatives and policies that must be undertaken by Government in an attempt to improve the long term production of cereals in the most affected governorates by the phenomenon of climate change such as the development of several important and regionally-based institutions and cooperation, providing subsidies to farmers.