Economic Impacts of Climate Change on Global Food Supply and Demand

Abstract

Global warming caused by a concentration of carbon dioxide in the atmosphere will be a major issue in world food markets over the next century. Agricultural production will be affected by climatic changes, such as rising ­temperature or droughts, mainly through changes in crop yields. When ­considering the relationships between food producers and consumers through trade, it is likely that climate change, such as global warming, may cause significant changes in ­agricultural markets even in the mid-term. Studies focusing on the impact of ­climatic change on agricultural product markets are very few. This research ­examines ­possible results of climatic change focusing on global warming and its impacts on world agricultural product markets, by using the JIRCAS (IFPSIM) world food model which considers aspects of climate changes. Yield functions of crops including temperature and rainfall as independent variables are estimated, and replaced the original functions in the IFPSIM model. The basic world food model is extended to a stochastic model considering correlations among ­countries for temperature and rainfall. The term of the outlook is 25 years, which is ­considered a mid-term projection. The Hadley Centre provides grid data of the A2 ­scenario from IPCC (HadCM3-A2) for expectations of future climate ­behavior. The simulation results of temperature and rainfall are used for estimating the baseline of food ­supply and demand 2005–2030. Simulation results show that crop production in some countries or regions will be affected greatly by rising temperatures with increased fluctuation. Crop production by the U.S., the European Union and South Asian countries could suffer severe damage from global warming. The results of simulation using the world food model show that the changes in ­production ­resulting from variations of temperatures are quite different for each crop in each country or region. However, world total production for most crops other than ­soybeans is not severely affected.