Economic Impact of Climate Change on Wheat Productivity in Bangladesh: A Ricardian Approach

Abstract

The study measured the economic impacts of climate change on wheat production in Bangladesh using Ricardian approach. Panel data on wheat yield and climate variables were used to estimate the model. Results indicated that most climate variables had a significant impact on the income of wheat production. The marginal increase of temperature during January and February reduced the net revenue by Bangladeshi Taka (BTk) 18,885 ha−¹ (USD 239.05) and BTk 9,603 ha−¹ (USD 121.56) respectively, whereas, marginal increase of temperature during December increased it by BTk 7,045 ha−¹ (USD 89.18). Increasing rainfall during December and January increases the net return by BTk 128 ha−¹ (USD 1.62) and BTk 543 ha−¹ (USD 6.87) respectively. The study used predictions from five different Global Circulation Models (GCM) for two IPCC emission scenarios and found that impacts on net revenues for these two scenarios are mixed depending on model predictions. Net revenue will decrease for both A2 and B2 emission scenarios using precipitation and temperature predictions for 2030 for three of the models, while it will increase for two models. At the same time, for 2050, net revenue will fall when temperature and precipitation of one of the models are used for the rest net revenue will rise. This means that while our study provided marginal effects for temperature and precipitation changes on farm’s net revenue, understanding about the climate change impact requires better climate modeling for the local situation. This is important to accurately predict the impact of climate change for future years.