Economic impact of global warming on the Uruguayan rural sector

This paper is part of a larger study about global warming impact that is being conducted simultaneously in seven South American countries: Argentina, Brazil, Chile, Ecuador, Colombia, Uruguay, and Venezuela, with the support of Yale University (USA), World Bank, PROCISUR, and PROCIANDINO. The objective of this regional project is to assess the economic effects of climate change on the agricultural sector and, more specifically, rural poverty. The results presented herein correspond to the partial study carried out in Uruguay. Because of its reduced size and climate variation, a satisfactory empirical estimation had to be achieved using a broader sample, with similar agro-ecological areas, that included data from Argentina as well. Nevertheless, it seems possible to get some general conclusions for Uruguay through such a procedure. The results of this study suggest that changes in average precipitation levels but particularly in temperatures during the Summer, should affect productivity and therefore land value. If, as expected, changes derive in warmer climate conditions, the effects would be highly negative for the agricultural sector. Commercial farms are more sensitive to climate changes than non-commercial farms. Likely, the latter could adapt better to changing climate conditions.