introduction to estimates of climate change impacts
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Introduction to estimates of climate change impacts. Emanuele Massetti FEEM and CMCC Capacity Building Programme on the Economics of Adaptation 2 nd Regional Training Workshop Agenda Bangkok, 30 September – 4 October. Outline. Brief introduction to the Ricardian Method - PowerPoint PPT PresentationTRANSCRIPT
Introduction to estimates of climate change impacts
Emanuele MassettiFEEM and CMCC
Capacity Building Programme on the Economics of Adaptation2nd Regional Training Workshop Agenda
Bangkok, 30 September – 4 October
Outline
• Brief introduction to the Ricardian Method• Hands-on with Excel
– Data Example– Functional forms – Marginal impacts– Absolute impacts– Sums across total farmland– Sums across
Ricardian method
• Land values reflect present and future (expected) productivity of land
• Analysis of data on agricultural land values and climate– Data from a “cross-section” with different land
values and different climate
• Estimates of the value of climate used to infer the impact of climate change
Land value and climate
Climate Variable
Va
lue
of L
an
d
Source: Mendelsohn, Nordhaus and Shaw (AER, 1994)
4
Example: dataFarmer Annual mean temperature (°C) Value of land
($/hectare)
A 12 300B 15 350C 25 600D 35 320E 21 500F 32 330G 28 512H 14 420I 19 480
Assumption: one hectare of land for each farmer
Functional forms
Observed Linear Quadratic
T Land Value
Predicted land value Difference Difference
squaredPredicted land value Difference Difference
squared
A 12 300 418 -118 13818 295 5 30
B 15 350 419 -69 4801 404 -54 2943
C 25 600 425 175 30590 531 69 4780
D 35 320 431 -111 12301 290 30 914
E 21 500 423 77 5963 524 -24 593
F 32 330 429 -99 9834 401 -71 4999
G 28 512 427 85 7252 497 15 221
H 14 420 419 1 2 371 49 2366
I 19 480 422 58 3409 499 -19 362
87969 17206
Marginal value of temperature
Impact of +2°CObserved Predicted
(Temperature)Predicted
(Land Values)
Temp. Land Value ($/ha) Land (ha)
Total Land
Value ($)
Temp. Change
New Temp.
Land value ($/ha)
Land values
with +2°C ($/ha)
Impact of +2°C
(total)
A 12 300 1 300 2 14 295 371 77
B 15 350 1 350 2 17 404 459 55
C 25 600 1 600 2 27 531 512 -19
D 35 320 1 320 2 37 290 197 -92
E 21 500 1 500 2 23 524 535 11
F 32 330 1 330 2 34 401 330 -70
G 28 512 1 512 2 30 497 456 -41
H 14 420 1 420 2 16 371 433 62
I 19 480 1 480 2 21 499 524 25
Total 3812 Total Impact ($) 7
Impact (%) 0.2%
Impact of +2°C with different farmlandObserved Predicted
(Temperature)Predicted
(Land Values)
Temp. Land Value ($/ha) Land (ha)
Total Land
Value ($)
Temp. Change
New Temp.
Land value ($/ha)
Land values
with +2°C ($/ha)
Impact of +2°C
(total)
A 12 300 12 3600 2 14 295 371 922
B 15 350 23 8050 2 17 404 459 1259
C 25 600 45 27000 2 27 531 512 -846
D 35 320 90 28800 2 37 290 197 -8311
E 21 500 25 12500 2 23 524 535 265
F 32 330 35 11550 2 34 401 330 -2460
G 28 512 20 10240 2 30 497 456 -817
H 14 420 15 6300 2 16 371 433 931
I 19 480 25 12000 2 21 499 524 633
Total 120040 Total Impact ($) -8424
Impact (%) -7.0%
Impact of local temp. changeObserved Predicted
(Temperature)Predicted
(Land Values)
Temp. Land Value ($/ha) Land (ha)
Total Land
Value ($)
Temp. Change
New Temp.
Land value ($/ha)
Land values
with +2°C ($/ha)
Impact of +2°C
(total)
A 12 300 1 300 1.8 13.8 295 364 70
B 15 350 1 350 1.6 16.6 404 449 45
C 25 600 1 600 2.3 27.3 531 508 -23
D 35 320 1 320 2.2 37.2 290 187 -102
E 21 500 1 500 2.1 23.1 524 535 11
F 32 330 1 330 2.15 34.15 401 325 -76
G 28 512 1 512 1.85 29.85 497 460 -37
H 14 420 1 420 2.1 16.1 371 436 65
I 19 480 1 480 1.9 20.9 499 523 24
Total 3812 Total Impact ($) -24
Impact (%) -0.6%