Climate Change Effects on Agricultural Production: The Regional and Sectoral Economic Consequences in China

Abstract

Climate is an essential element in agricultural production, and climate change inevitably have an impact on agriculture. Assessing the economic consequences of climate change requires comprehensive assessments of the impact chain from climate to crops and the economy. In our previous study, we derived a dose-response function to estimate the response of crop yields to climate variables through a systematic review. In this paper, a dynamic multiregional input-output model is established to assess the economic consequences of changes in agricultural production on China's regional and sectoral levels. The results show that (1) the direct economic damage is equivalent to 1% of gross domestic product (GDP) which implies the resulting economic cascade effect (ECE) that amounts to 17.8% of China's GDP. At the end of 21st century, the ECE is −0.1% to 13.6% of GDP (negative values indicate economic gains) without considering CO 2 fertilization effect, of which the ECE in the most pessimistic pathway are equivalent to the total agricultural output in China today. (2) Regional-level results show an uneven distribution of economic impact in China, which is related to the regional economic development. The least developed region in China experiences 2.8 to 8.5 times more ECE caused by climate change than the most developed region. (3) Sector-level results show that agriculture is still the main affected sector, but in developed regions, manufacturing and services also bear part of the ECE. Plain Language Summary Evidence from numerous studies has confirmed the impact of climate change on agriculture. This paper assesses the economic consequences of changes in agricultural production under climate change in China. We find that the direct economic damage is equivalent to 1% of gross domestic product which implies the resulting economic cascade effect that amounts to 17.8% of total gross domestic product. The most pessimistic estimate of the economic impacts in the 2090s is equivalent to China's total agricultural output today without considering CO 2 fertilization effect of climate change. The economic impacts suffered by different regions of China are related to regional economic development. The least developed region in China experiences more economic damage from climate change than the most developed region. In addition to the agricultural sector, manufacturing and services are expected to experience part of the impacts, especially in developed regions. This paper hopes to provide data support for a comprehensive understanding of climate change impacts in different regions of China by assessing the economic consequences.

Assessment of the Regional and Sectoral Economic Impacts of Heat‐Related Changes in Labor Productivity Under Climate Change in China

“…In the present study, the AMRIO model is used to estimate the economic impacts of heat‐related changes in labor productivity in hot working environments under climate change. The AMRIO model is based on the Leontief production function and uses an iterative model framework to simulate the macroeconomic impact of external shocks and the economic ripple effects between regions and sectors (Liu et al., 2020). The AMRIO model originated from a traditional input‐output (IO) model and was initially used to evaluate the macroeconomic impact of natural disasters (Hallegatte, 2008; Li et al., 2013).…”

“…The AMRIO model used in this study is based on the Chinese multiregional IO table (Mi et al, 2017), which divides China into seven regions, covering eight sectors in each region. A detailed description of the model is provided in (Hallegatte, 2008) and (Liu et al, 2020). Each sector in the economy can be regarded as a producer, where labor is one of the main inputs for production.…”

Estimates of the Potential Indirect Damage to China by Restricting Energy Increase to Peak Carbon Emissions

“…It should be noted that the energy in this study refers to the main conventional energy products currently used in China’s social and economic development, namely, coal, oil, natural gas, and electricity, so the end‐use energy demand in our study was the total consumption demand of these energy products in the future. After comparing many IO‐based models (Hallegatte, 2008; C. Huang et al., 2020; Koks & Thissen, 2016; Koks et al., 2014; Liu et al., 2020; Okuyama, 2007; Oosterhaven & Bouwmeester, 2016; Santos, 2006), we chose to use the ARIO model as a prototype for this study to assess the indirect economic impact of China as a single region due to its applicability. The ARIO model is capable of dynamic simulation of complex supply and demand correlations among sectors, and it is a powerful tool for assessing macroeconomic impacts at regional and sectoral levels through the interaction of intermediate consumption and demand (J. Li et al., 2013).…”

Worrying about Climate Change

“…economic cascade effect amounts to 17.8% of China's GDP). By 2100 it will be 0.1% to 13.6% of GDP (negative values indicate economic gains) without considering CO 2 fertilization effect [50].…”