The economic impacts of climate change on the Chilean agricultural sector. A non-linear agricultural supply model

Roberto Ponce1*, Maria Blanco2, and Carlo Giupponi3
Agriculture could be one of the most vulnerable economic sectors to the impacts of climate change in the coming decades, with impacts threatening agricultural production in general and food security in particular. Within this context, climate change will impose a challenge to policy makers, especially in those countries that based their development on primary sectors. In this paper we present a non-linear agricultural supply model for the analysis of the economic impacts of changes in crop yields due to climate change. The model accounts for uncertainty through the use of Monte Carlo simulations about crop yields. According to our results, climate change impacts on the Chilean agricultural sector are widespread, with considerable distributional consequences across regions, and with fruits producers being worst-off than crops producers. In general, the results reported here are consistent with those reported by previous studies showing large economic impacts on the northern zone. However, our model does not simulate remarkable economic consequences at the country level as previous studies did.
Keywords: Climate change, farming model, irrigation, uncertainty
1Universidad del Desarrollo, Facultad de Economía y Negocios, Ainavillo 456, Concepción, Chile. *Corresponding author (robertoponce@udd.cl).
2Universidad Politécnica de Madrid, Departamento de Economía y Ciencias Sociales Agrarias,Avda. Complutense 3, 28040, Madrid, España.
3Ca’Foscari University, Department of Economics, S. Giobbe 873, 30121 Venezia, Italy.