A NEW study done by the Potsdam Institute for Climate Impact Research (PIK) shared to Database has revealed that global warming could create substantial economic damage in agriculture.
“Agriculture is very sensitive to climate change—even a small increase of global mean temperatures can have significant effects on regional crop yields, affecting both the profitability of agricultural production and the share of income spent on food,” lead PIK author Miodrag Stevanović said.
“Our study quantifies economic impacts and analysis the role of international trade as an adaptation measure. We find that economic losses in agriculture could add up to the annual amount of roughly 0.8 percent of global GDP at the end of the century with a very restricted trade regime,” Stevanovic explained.
He said as small as this percentage sounds, it actually translates to losses of $2.5 trillion and is comparably higher for regions with limited agricultural resources, with respect to growing agricultural demand, for example the Middle East, Africa and India.
“In contrast, further trade liberalization in agricultural commodities could reduce financial damage globally by 65 percent, to 0.3 percent of global GDP,” he added.
Alexander Popp, PIK coauthor, further explained that: “Both global warming and free trade favor northern regions, like Europe and the United States, since producers’ gains increase as trade patterns shift northward. At the same time, southern regions, like Africa or India, could theoretically reduce climate-change-related damages by half, through more liberalized food markets.”
Arguing, Popp said: “Irrespective of our assumptions on global trade, climate change will result in reduced crop yields in many areas. At the same time, intensifying production or expanding cultivated land into previously untouched areas may come at a risk: It could lead to additional greenhouse-gas emissions through tropical deforestation or increased fertilizer use.”
According to him, this could then further enhance climate-change pressure on agriculture.
Researchers at PIK laboratories combined 19 different climate projections with simulations of crop growth to assess economic impacts of climate change in the agricultural sector.
Researchers said, while the magnitude of damage varies with different assumptions on crop-productivity response to climate change, carbon dioxide plant fertilization affects socioeconomic projection.
The new study highlights the important role of trade as a key measure to partly reduce climate-change impacts.
Hermann Lotze-Campen, PIK’s chairman of research domain Climate Impacts and Vulnerabilities, said: “The best way to avoid these risks is to limit climate change. However, for impacts that cannot be avoided, an open and diversified trade system can be an important adaptation option.
“It can account for changes in global patterns of agricultural productivity and, thus, allow for reducing production costs and enhancing food security, as climate change will have an amplifying effect on the gap between developed and developing countries, and reductions in trade barriers will have to be accompanied by measures for poverty reduction and social safety nets.”
If food prices increase due to climate-change impacts, households will not only have to spend more on their food consumption, but could also face risks of insufficient access to food and malnutrition, the new study said.
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