Climate change adaptation in agriculture: A computable general equilibrium analysis of land-use change in Nepal

Abstract

This paper investigates the feasibility of changes in cropland-use as an adaptation strategy to minimise the economy-wide costs of climate change on agriculture. Nepal makes an interesting case study as it is one of the most vulnerable agricultural economies within South Asia. We develop a comparative static multi-household computable general equilibrium (CGE) model for Nepal, with a nested set of constant elasticity of transformation (CET) functional forms, to model the allocation of land within different agricultural sectors. Land transformation elasticities in these CET functions are allowed to reflect the ease of switching from one crop to another based on their agronomic characteristics. The results suggest that, in the long run, farmers in Nepal tend to allocate land to crops that are comparatively less impacted by climate change, such as paddy, thereby minimising the economy-wide impacts of climate change. Furthermore, the results reveal that land-use change tends to reduce the income disparity between different household groups by significantly moderating the income losses of marginal farmers. Therefore, it is suggested that policy makers in Nepal should prioritise schemes such as providing climatesmart paddy varieties (i.e., those that are resistant to heat, drought and floods) to farmers, subsidising fertilizers, improving agronomic practices, and educating farmers to switch from crops that are highly impacted by climate change to those that are not, such as paddy.

A general equilibrium assessment of climate change–induced loss of agricultural productivity in Nepal

“…medium and high numbers of the estimations (see Table 1) for the modelling analysis described in the next section. Source: Chalise and Naranpanawa (2016)…”

Local People's Perception on Climate Change, its Indicators and Adaptation Strategies in the Chitwan-Annapurna Landscape, Nepal

“…The solution to cope with climate change for the marginal people of Nepal seems to develop adaptation strategies. The recent studies have been indicated that there is a large deficit of knowledge and information about the climate change and related adaptation strategies to mitigate risk of climate change [8,10]. Present study highlights responses of people towards the indicators of climate change and status of public awareness in human dominated midhill landscape-Chitwan Annapurna Landscape.…”

“…Undeveloped countries are more vulnerable than developed countries as the developed countries can develop various adaptive measures to cope with the climate change [7]. Rural people are likely to be more vulnerable to climate change, particularly because of compounding challenges of poverty, low infrastructural and technological development and high dependence on rain-fed agriculture [1,8,9]. More than 80% of agricultural production in Hilly region of Nepal is rain-fed [10].…”

Global Agricultural Trade Pattern in A Warming World: Regional Realities

“…Moreover, Monier et al (2018) [38] indicate that few theories attempt to directly translate the impacts of global mean temperature change to GDP. Yet, Chalise and Naranpanawa (2016) [39] reported that overall, the Nepalese economy was significantly and negatively impacted by climate change-induced agricultural productivity losses, and indicated an urgent need to mainstream adaptation and mitigation strategies based on the results of a country-specific CGE model. Cai et al (2016) [40] suggested that climate change can significantly reduce food production (relative to historical trends), and can create upward pressure on food prices, resulting in adverse food security impacts in the South Asian region.…”

“…Despite this, further research is needed to assess the trade-offs between agricultural intensification and its impacts on ecosystems (e.g., biodiversity, carbon stocks and flows), as well as the social aspects involved when forests, pasture, or previously unused areas become cropland [3]. Although CGE modelling is generally used for this type of research [39,40,42,43] and has analytical advantages for use in making economic assessments of the effects of climate change and evaluating climate policy efficacy, other models should be used to compare the impacts of climate change, since CGE models rely on different databases [1]. To improve future models, model integration under a common data exchange protocol also has great potential [1].…”