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Abstract
This paper develops a multisector growth model to examine the potential
effects of climate change and Brazilian agriculture. In keeping with the current
literature, the model assumes climate (here temperature and rainfall) affects agricultural
output via its impact on total factor productivity (TFP). We begin by estimating an
aggregate agricultural technology for Brazil, with econometric results suggesting a
strong relationship exists between rainfall, temperature and agricultural TFP. We then
introduce the climate effects into a dynamic multisector growth model of Brazil. Model
results suggest climate change could have a negative impact on agriculture, but benefit
manufacturing, with long run agricultural output per unit of labor being less than half of
agricultural output per worker in a no climate change world.