ABSTRACT
To assess the desirability of policies to reduce greenhouse gas emissions, it is necessary to estimate the costs that climate change is likely to impose. A number of studies have estimated the costs of climate change to agriculture by modeling changes in yield on the assumption that the existing pattern of land use will remain unchanged. Robert Mendelsohn et al. (1994), hereafter MNS, call this the “dumb-farmer scenario” and observe that costs derived in this way represent an upper-bound estimate for the costs of climate change. As an alternative, MNS propose a “Ricardian” approach, based on comparative static estimates of the change in equilibrium rents to land associated with a onetime change in climatic conditions. MNS estimate that a 5°F increase in mean temperatures will yield changes in farmland rents ranging from a 4.9-percent loss to a 1.2-percent gain.
