Will U.S. Agriculture Really Benefit from Global Warming? Accounting for Irrigation in the Hedonic Approach

There has been a lively debate about the potential impact of global climate change on US agriculture. Most of the early agro-economic studies predicted large damages. In an innovative paper Robert Mendelsohn, William D. Nordhaus and Daigee Shaw (MNS), propose a new approach: using the variation of t...

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Bibliographic Details
Published in:The American economic review 2005-03, Vol.95 (1), p.395-406
Main Authors: Schlenker, Wolfram, Hanemann, W. Michael, Fisher, Anthony C.
Format: Article
Language:English
Subjects:
Agricultural economics
Agriculture
Arid zones
Climate change
Construction costs
Corn
Crop economics
Crops
Dryland farming
Economic impact
Economic models
Empirical research
Environmental economics
Estimation
Farmers
Farming
Farmlands
Farms
Global warming
Irrigated farming
Irrigation
Irrigation water
Methodology
Modelling
Precipitation
Prices
Production costs
Shorter Papers
Studies
Subsidies
Surface water
U.S.A
Water supply
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Summary:There has been a lively debate about the potential impact of global climate change on US agriculture. Most of the early agro-economic studies predicted large damages. In an innovative paper Robert Mendelsohn, William D. Nordhaus and Daigee Shaw (MNS), propose a new approach: using the variation of temperature and precipitation across US counties to estimate a reduced-form hedonic equation with the value of farmland as the dependent variable. A change in temperature and/or precipitation is then associated with a change in farmland value, which can be interpreted as the impact of climate change. Several authors have questioned the particular implementation of MNS. Specially, they suggest: 1. the hedonic approach cannot be used to estimate dynamic adjustment costs, 2. the results are not robust across different weighting schemes, and 3. the inadequate treatment of irrigation in the analysis might bias the results.
ISSN:0002-8282
1944-7981
DOI:10.1257/0002828053828455