# **1. Introduction**

There is mounting political concern about the potential impacts of future climate change. In January 2005 the EU carbon emissions trading scheme became operational and in February the Kyoto Protocol entered into force. Climate change, along with the plight of Africa, was at the top of the political agenda at the G8 summit held in Gleneagles, Scotland, in July.

Although predicting how much global warming will ultimately occur is difficult, the latest Intergovernmental Panel on Climate Change (IPCC) report suggests that the increase in global mean temperatures over the next century could be between 1.4 and 5.8<sup>o</sup> C.<sup>3</sup> Patterns of precipitation will also change, affecting the hydrological cycle. Sea levels will rise by 9cm to 88cm, mainly through the thermal expansion of the ocean. Although the precise extent of these changes and their consequences is subject to considerable scientific uncertainty, there is one issue on which there is broad agreement (e.g. Watson et al. 1997): developing countries are especially vulnerable to climate change because agricultural productivity depends on the climate. And in developing countries agriculture employs most of the workforce and is responsible for around a quarter of GDP (World Bank 2004).

Houghton (2004) identifies three main ways in which climate change will affect the agricultural sector. First, changes in temperature and precipitation lead to changes in soil moisture. Irrigation can help reduce the sensitivity of agricultural performance to climatic variables but only if water supplies are available. The availability of such water is of course also likely to be heavily affected by climate change.<sup>4</sup> Second, temperature has a direct effect on crop yields. Different crops have different optimal growing conditions and high temperatures can damage those already close to their maximum toleration limits under current conditions. Third, experiments have shown that elevated concentrations of carbon dioxide may promote the growth of certain crops.<sup>5</sup> Early work on quantifying the economic impact of climate change on agriculture relied mainly on laboratory experiments which studied the effect of temperature change on crop yields. The results obtained from these experiments were then used to predict how yields might change in the field under different climate change scenarios. These exercises implicitly assumed that farmers would continue growing the same crops regardless of the climatic conditions. Subsequent work has adopted a more sophisticated linear programming approach whereby land is allocated to particular crops by profit maximizing farmers, subject to agroclimatic suitability constraints. Such models enable researchers to predict the effect of movements in agro-climatic zones on world prices, patterns of trade and production, and consumer and producer surpluses. But despite their complexity these models are nevertheless incapable of incorporating into the analysis all possible farmer adaptation strategies to changing climate.<sup>6</sup> For a critical overview of these methodologies and the bibliographic details of key studies, see Mendelsohn & Dinar (1999) and Kurukulasuriya & Rosenthal (2003).

> 3 Predictions of climate change depend on population growth assumptions, assumptions about economic growth, improvements in energy efficiency, etc. The figures quoted are global averages.

> 4 Runoff is the amount of water which runs into rivers and streams following evaporation and transpiration by plants. It is a significant part of what remains available for human use, including irrigation (Houghton 2004). 5 One could argue that changes in the geographical range of pests and diseases caused by climate change might also affect agricultural productivity.

> 6 Other forms of adaptation include for example changes in planting dates and changes in the method of cultivation.

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