This paper utilizes a Ricardian model to test the relationship between annual net revenues and climate across Israeli farms. The study finds that it is important to include the amount of irrigation water available to each farm in order to measure the response of farms to climate. With irrigation water omitted, the model predicts climate change is strictly beneficial. However, with water included, the model predicts that only modest climate changes are beneficial while drastic climate change in the long run will be harmful. Using the AOGCM Scenarios we show that farm net revenue is expected to increase. Although Israel has a relatively warm climate a mild increase in temperature is beneficial due to the ability to supply international markets with farm product early in the season.
Bibliographical noteFunding Information:
We would like to thank Dubi Wolfson from the Israel Ministry of Agriculture for sharing his knowledge with us. The work leading to this paper was funded in part by the German Federal Ministry of Education and Research (BMBF) in collaboration with the Israeli Ministry of Science and Technology (MOST) in the framework of the project GLOWA Jordan River and by the Research Committee of the World Bank under the study ‘Climate Change and Rural Development' that was tasked managed in the Agriculture and Rural Development Department of the World Bank by Ariel Dinar. The views expressed in this paper are those of the authors and should not be attributed to the World Bank.
- Climate change
- Farm revenues
- Ricardian model