Economic effects of climate change on the Mediterranean’s irrigated agriculture

Abstract

Purpose – This paper aims to assess the economic effects of climate change on the Mediterranean’s irrigated agriculture and how the adoption of alternative crop varieties adapted to the expected length of the growing season can be an effective adaptation measure. Design/methodology/approach – A case study of two irrigation areas in Southern Portugal is used to assess the response to climate change impacts on crop yields and irrigation requirements, and an agricultural supply model is calibrated using a positive mathematical programming (PMP) approach was developed. Findings – Climate change reduces crop yields and causes a slight decrease in irrigation requirements, which could allow an increase in the irrigated area. However, positive impacts on rural areas regarding employment and investment are not expected. The adoption of adaptation measures based on alternative crop varieties, which could maintain crop yields at current levels, increases dramatically the economic value of water and mitigates losses in farm income. Research limitations/implications – The impacts on output and input market prices, as well as other biophysical impacts (for instance, CO2 and water availability), are important in understanding the effects of climate change on irrigated agriculture, but they were not considered in this study. While this may be a limitation, it can also be a stimulus for further research. Practical implications – This is an empirical paper, whose results contribute to improving knowledge about the effects of climate change on irrigated agriculture in Mediterranean areas, namely, its economic impacts on returns and the use of agricultural resources (land, water, labour and capital). Other practical implications of the paper are associated with the methodological approach, which provides a framework able to deal with the complexity and multidimensional effects of climate change. Social implications – The results of the paper provide important information for scientists, politicians and other stakeholders about the design of more effective adaptation measures able to mitigate the effects of climate change. Originality/value – Crop yields and irrigation requirements were previously calculated based on data generated by the regional climate models. This is the first time that an application is developed for Portugal. Two distinct profiles of irrigation areas were studied and a large set of crops was considered, which is not common in the existing studies. To specify the PMP approach used to calibrate the agricultural supply model, exogenous crop-specific supply elasticities were estimated through a least square model, which is not common in previous studies.