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A Structural Ricardian Valuation of Climate Change Impacts on Agriculture in Pakistan

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Mirza Nomman Ahmed

This book presents the economic analysis of the impacts of climate change on agriculture in Pakistan. Particular emphasis is laid on the magnitude of implicit adaptations in overall climate impact assessment and the analysis of selected adaptation options. Using a hedonic pricing model and a revealed choice approach, this study identifies the impacts of climate change on agricultural incomes, depicts the spatial patterns and seasonality of the impacts, and models the future adaptation behavior of farmers in the crop sector. A high sensitivity of farming in Pakistan to climate change is confirmed. With a changing climate and income in mind, farmers in Pakistan are more likely to choose rice, vegetables and maize, whereas they move away from wheat, sugarcane, cotton and fruits.

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9 Conclusions and Policy Implications

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The economic assessment of climate change impacts poses a serious challenge as great temporal and spatial variation can be expected. This was also revealed by the present study. Research with particular emphasis on the economic impacts of climate change on agriculture has been scarce, especially for developing countries, including Pakistan. To fill this gap this study not only contributes to the literature by modeling climate change impacts on the farming sector on a full country scale, but also by endeavoring to depict the adaptations that farmers are most likely to make in the crop sector under differential climatic conditions. The quantification of adaptations plays a central role. A major contribution is made towards the analysis of spatial effects across Agro- Ecological Zones, districts and provinces using a multi-seasonal approach. For the first time both, standard and structural models are applied for a developing country, with the advantage to have a comparison between both approaches and to test for the robustness of the results from a differential modeling perspective. The Standard Ricardian Model for the analysis of climate change impacts on agricultural land values is constructed by using the Pakistan Social and Living Standards Measurement Survey (PSLM) for the farming season 2008/2009. Ultimately, 21.910 agricultural households, which were selected on the basis of land ownership from an original sample of 75.188 households, were aggregated into 110 districts with further differentiation into rainfed and irrigated farms. For the Structural Ricardian Model, which in contrast to the Standard Ricardian Model analyzes net crop...

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