Environmental and Ecological Statistics

, Volume 23, Issue 1, pp 1–21 | Cite as

Modeling farmer adaptations to climate change in South America: a micro-behavioral economic perspective



This paper evaluates behavioral adaptation models to climate change using South American agricultural data. This paper finds that the Ricardian model with spatial effects leads to 20 % loss of land value under the UK Hadley center (UKMO hereafter) model and 11 % loss under the milder US Goddard Institute (GISS hereafter) model by the middle of the century. The micro portfolio adaptation model (G-MAP hereafter), on the other hand, results in a much smaller damage estimate: 1 % loss of land value under the GISS model and 3.4 % loss under the UKMO model. Even with the G-MAP model, however, the land value of the crops-only system falls sharply by as much as 9.5 % under the GISS scenario. In contrast to the Ricardian model, the G-MAP model can explicitly explain the decisions to choose one of the agricultural systems as well as the conditional land value function for each system of agriculture. Under the GISS model, the choice of a crops-only farm declines by 3.3 % which is offset by an increase in the mixed system by 2.1 % and an increase in the livestock-only system by 1.2 %. Although the land value of the crops-only system falls by 9.5 %, the land value of the mixed system falls only by 3.5 % while that of the livestock-only system increases by a large percentage. This paper finds that the differences in the impact estimates between the two models result from the treatment of sunk cost. The result from the Ricardian model would deviate from that from the G-MAP model if sunk cost is significantly large.


Agriculture Climate change G-MAP Ricardian model South America Sunk cost 



I thank Prof. Robert Mendelsohn at Yale University for various comments on earlier versions of the paper.

Supplementary material

10651_2015_320_MOESM1_ESM.docx (13 kb)
Supplementary material 1 (docx 12 KB)


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Copyright information

© Springer Science+Business Media New York 2015

Authors and Affiliations

  1. 1.School of Ecology and Environment StudiesNalanda UniversityDist-Nalanda, RajgirIndia

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