Economic consequences of climate-induced changes in crop yields in a water-abundant region

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Allan, Grant J. and Figus, Gioele and Pathak, Prakash (2025) Economic consequences of climate-induced changes in crop yields in a water-abundant region. The Review of Regional Studies. ISSN 1553-0892 (In Press)

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Abstract

A concerning consequence of climate change is the impact that reduced rainfall and increased temperatures are predicted to have on agricultural yields, with subsequent economic impacts across regions based on their reliance on agricultural production and knock-on effects through impacts on prices and trade. Several studies have used the relationship between climate variables and agricultural yields to project changes in agricultural productivity under climate scenarios as the input to Computable General Equilibrium models, however such studies are typically dominated by water-scarce countries. We extend this by considering the differential regional impacts and economic consequences within a water-abundant nation, permitting the analysis of climate-induced impacts on regional trade and production and consumption links between regions. Our framework estimates the historical relationship between climate variables and agricultural yields for four crop types (wheat, oats, winter barley and spring barley), calculates the future productivity of land under two climate scenarios, and then simulates the economy-wide impacts of these in a two-region computable equilibrium model of Western and Eastern Scotland. Our results suggest that there could be negative impacts of future changes in climate agricultural yields, with an overall reduction productivity by the end of the century which depends on climate scenarios. While the largest (absolute) negative economic impacts are in Eastern Scotland region, where cereal production is concentrated, impacts transmit through trade between the two regions, showing that policies to improve adaptation to climate change within the Agricultural sector would help to minimise overall economic losses across even water-abundant regions.

ORCID iDs

Allan, Grant J. ORCID logoORCID: https://orcid.org/0000-0002-1404-2768, Figus, Gioele ORCID logoORCID: https://orcid.org/0000-0002-2642-5504 and Pathak, Prakash ORCID logoORCID: https://orcid.org/0009-0002-8929-2881;
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