Climate Change, Crop Selection and Agricultural Revenue in Ghana: A Structural Ricardian Analysis

Abstract

We apply a Structural Ricardian Model (SRM) to farm-level data from Ghana for seven principal food crops in order to model the factors which influence farmers' decisions about which food crops to grow and the revenue conditional on these choices. Our application of the SRM incorporates a flexible functional form to allow for the possibility that the effects of temperature and rainfall may not be linearly separable. We use this model as a basis for simulations of the effects of climate change. These simulations suggest that extreme climate change will lead to a significant reduction in the average net revenue per hectare from maize, which accounts for over half of current food production. Across a range of climate change scenarios, there is also substantial substitution of maize for heat-tolerant millet, and a reduction in the cultivation of other crops. Under most of the climate change scenarios that we consider, these results imply a substantial reduction in the aggregate value of agricultural production, since millet is the lowest-value crop.

The Effect of Climate Change on Agricultural Crop Returns in Uganda

“…The results indicate that when average temperature increases by 1 percent, on average groundnuts' farm revenues increase by 0.543 percent. Other studies also find a significant effect of average temperature on farm revenues, for example Etwire et al (2019) in Ghana establish that when average temperature increases by 1 percent, on average maize farm revenues increase by 0.28 percent. In addition, farmers of beans and cassava had fewer returns due to flooding although the effect was not significant.…”

“…These empirical results are consistent with those of Tokunaga et al (2015) in Japan whose elasticities are between -0.39 percent and -0.82 percent. Etwire et al (2019) in Ghana find that for 1 percent increase in average temperature, the plantains revenues decrease by 2.612 percent, in Nigeria, Ater & Aye (2012) empirically estimate elasticity as -2.589 percent. Exenberger et al (2014) find different elasticities for grouped countries, for example -0.004 percent for high income, -0.014 percent for middle income and -0.016 percent for low income.…”

Mortgage market and climate variability adaptation: evidence from the mortgage market in emerging cities

“…The national economy stands to struggle from the impacts of climate change since agriculture, hydroelectrically energy and forestry remain the backbone of the country's source of income. Taken into cognisance, a 20-year baseline data on climate change as observed by experts, it is projected that maize and other cereal crop yields will lessen by 7% by 2050 (UNEP et al 2004;Malhi et al 2021).The situation in Ghana is worsening with time due to the persistent reduction of the biodiversity by real estate developers in their quest to providing housing and this is a threat to the SDG13 (see Etwire et al 2017).…”

Impact of Climate Change on Food Systems: A Narrative Review

“…In addition to these, the predominance of rain-fed agriculture in much of developing countries particularly Sub-Saharan African countries results in food systems that are highly sensitive to rainfall and temperature variability and change. Climate change affects farmer's choice of crops by replacing high revenue crops like maize with heat-tolerant millet that earns less income to the farmers in Ghana [22] and this has a significant effect on annual household income. Maize production was predicted to decrease due to climate variations in Kenya [23] and this has a negative effect on stallholder farmers' household income thus enhancing poverty.…”