Evaluating the economic impacts of climate change on Brazilian agriculture

This paper aims to assess the long-term effects of global climate change on Brazilian agriculture. In particular, it will address the following questions: (i) What are the long-term effects of global climate change in terms of land values in the distinct Brazilian biomes?; and (ii) do these effects differ according to farm size? In order to answer these questions, the hedonic approach proposed by Mendelsohn et al. (1994) is estimated for Brazilian municipalities. Since the intention is to assess socio-economic issues regarding global climate change, the paper also conducts a disaggregated analysis of the effects according to farm size, so as to evaluate whether large and small Brazilian farms would be distinctly affected by climate change. The simulations of the effects of global climate change on Brazilian agriculture refer to 2020, 2050 and 2080 time slices. The climate projections are from ten General Circulation Models of the Fourth Assessment Report of the IPCC (2007) according to A2 and A1B scenarios. The results show that the expected effects of global climate change on Brazilian agriculture vary spatially and by farm size categories. In the Pampa region, for example, the effects on land values are quite different depending on the farm size category. We believe that the outcomes of this research will be of great importance for supporting the formulation of risk mitigation and adaptation strategies, poverty and welfare policies in Brazil’s future, especially because the breakdown of farms by size and biomes is a pioneering application in Brazilian scientific literature.