Impacts of water cycle changes on the rice market in Cambodia: stochastic supply and demand model analysis

Abstract

A supply and demand model for rice in Cambodia, which includes among other factors evapotranspiration as a water supply variable impacting regional yields and planted areas, is developed to aid in the design of agricultural policies and planning. Impacts are determined stochastically by drawing on water cycle distributions and evaluating the resulting variation in production and price bands for local rice markets. The results of the baseline analyses indicate that production of wet and dry season rice steadily increases and the consumption per capita slightly decreases due to the negative income elasticity. Results of a partial stochastic analyses show that the production of rice in regions where elevations are high and the land vulnerable to flooding are the most sensitive to increased fluctuations in water supply. The changes also affect the rice market through equilibrium price changes. The upper price band, which is the width between average and 90th percentile, is larger than the lower band, which is the width between average and tenth percentile, suggesting that the situation of low income consumers could grow worse under an unstable environment with relatively larger upward price spikes. The results imply that development of irrigation facilities and water management systems maybe required for Cambodian provinces which rely heavily on agriculture, particularly rice production, under increasing climatic variation.

Features of the AFFRC model for evaluating the relationship between the water cycle and rice production

“…These assumptions are explained in more detail by Furuya and Meyer (2007). Table 2 shows the modeled impact on the rice market for all Thailand.…”

“…Prediction of the impact of changes in the global water cycle on agriculture provides important information that can help solve some of the future problems of agricultural development and reduce poverty in developing counties (Furuya and Meyer 2007).…”

“…By way of example, FSDM for given country mainly consists of yield functions, planted area functions, production identities, supply identities, a consumption function, an import function, and a price linkage function. The yield and area functions for the wet season are estimated for all provinces, and monthly evapotranspiration is used as an explanatory variable-a proxy for available water supplies (Furuya and Meyer 2006).…”

Effects of Climate Change on Supply and Demand of Rice in Cambodia

“…Endogenous variables are defined as variables determined by economic model, while exogenous variables are determined from outside. Furuya et al (2008) used a supply and demand model of an agricultural product in their research to estimate the response of rice price under the changing water cycle in Cambodia. The factors used for calculating supply side are production, stock change and import functions.…”

Assessment of changes in water cycles on food production and alternative policy scenarios

“…8); thus, adequate water management is required for upland cultivation to reduce the risk faced by producers (Furuya and Meyer 2006). However, when considering price risk, wet-season rice cultivation is most vulnerable to water-supply changes.…”