Impact of Climate Change on Regional Economies Through Fluctuations in Japan’s Rice Production: Using Dynamic Panel Data and Spatial CGE Models

Abstract

The agriculture industry would be most affected by global warming-induced climate change. Based on the assumption that only rice is affected by global warming, this study examines the impact of global warming on regional economies based on the spillover effects from other agricultural products and the industrial sector having an input-output relationship with agriculture. Our findings show that global warming-induced climate change has different impacts on each region, and it creates regional economic disparities. For example, global warming has a positive impact on regional economies in Hokkaido and Tohoku. In addition to increasing rice production, the gaps in rice prices in Kanto and the region west of Kanto will increase outflow, which in turn further increases production. Meanwhile, global warming will reduce production in Kanto and the region west of Kanto, and it will have a negative impact on regional economies. Furthermore, other agricultural products will be negatively affected in all the regions due to changes in rice production, while production in the food and beverage industries will be negatively affected in Kanto and the region west of Kanto. However, when the impact of global warming becomes greater, production in the food and beverage industries will increase in Hokkaido and Tohoku. Finally, we find that there is the good impact of adaptation technologies on the production of rice in Kanto and the region west of Kanto from simulation results of the development of adaptation technologies such as high-temperature-tolerant rice varieties in regions affected by global warming. Thus, the promotional policy of adaptation technologies such as high-temperature-tolerant rice varieties and public support for industrial clusters based on rice are necessary in order to eliminate the disparities in regional economic welfare caused by global warming.