Climate Change, Risk and Grain Production in China

This paper employs the production function-based method proposed by Just and Pope (1978, 1979) to explicitly analyze production risk in the context of Chinese grain farming and climate change, and test for a potential endogeneity of climate factors in Chinese grain production. Our results indicate that China might, at least in the short run, become a net beneficiary of climate change. In particular, we find that increases in annual average temperature increase mean output at the margin and at the same time lead to a reduction of production risk. Further calculations suggest that a 1 °C increase in annual average temperature would entail an economic benefit of $1.1 billion due to the increasing mean output. Furthermore, a Hausman test reveals no endogeneity of climate variables in Chinese grain production.

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Conference Paper/ Presentation
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JEL Codes:
Q1; Q54
Series Statement:
Selected Paper

 Record created 2017-04-01, last modified 2018-01-22

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