Adaptation May Reduce Climate Damage in Agriculture by Two Thirds

Although climate change may severely impact agriculture, farmers can mitigate it by adapting. Using US data, we estimate the amount of potential loss in agricultural profits, due to climate change, that can be reduced by agricultural adaptation. We consider two panel frameworks that differ only in their fixed effects specifications, where this difference allows us to estimate the climate change impact on agricultural profits with or without adaptation. Comparing these estimates, we find that adaptation has the potential to offset about two‐thirds of the end‐of‐century loss in agricultural profits potentially resulting from climate change. We also find that the warmest region in the US (i.e. in the south) has the most to gain from adaptation.