Structural Ricardian Analysis of South-East Asian Agriculture

This paper examines the impact of climate change on the net revenue (NR) of farmers from Bangladesh, Indonesia, Sri Lanka, Thailand and Vietnam. Two Ricardian models are estimated: (1) a traditional Ricardian model of the impact of climate change on annual farm NR and (2) a structural Ricardian model that first estimates the number of growing seasons and then the net revenue per season. The traditional model reveals annual NR is sensitive to autumn and summer climate variables. The seasonal effects offset each other so that uniform marginal effects are insignificant. Future climate scenarios likely harm Sri Lanka but could either benefit or harm Indonesia depending on the climate scenario. The structural Ricardian model suggests climate change will reduce the net revenue of three-season farms and increase the revenue of one-season farms causing farmers to switch from three-season farming to one-season farming. Expected losses by 2100 for the region range from −10% to −18%. Impacts in Indonesia may be higher ranging from −20% to −28%.

Originally published on World Scientific.

Authors

BABATUNDE O. ABIDOYE

Yale School of Forestry and Environmental Studies 

PRADEEP KURUKULASURIYA

United Nations Development Programme

BRIAN REED and ROBERT MENDELSOHN

Yale School of Forestry and Environmental Studies