IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/16037.html
   My bibliography  Save this paper

Measuring the Economic Effect of Global Warming on Viticulture Using Auction, Retail, and Wholesale Prices

Author

Listed:
  • Orley C. Ashenfelter
  • Karl Storchmann

Abstract

In this paper we measure the effect of year to year changes in the weather on wine prices and winery revenue in the Mosel Valley in Germany in order to determine the effect that climate change is likely to have on the income of wine growers. A novel aspect of our analysis is that we compare the estimates based on auction, retail, and wholesale prices. Although auction prices are based on actual transactions, they provide a thick market only for high quality, expensive wines and may overestimate climate's effect on farmer revenues. Wholesale prices, on the other hand, do provide broad coverage of all wines sold and probably come closest to representing the revenues of farmers. Overall, we estimate a 1°C increase in temperature would yield an increase in farmer revenue of about 30 percent.

Suggested Citation

  • Orley C. Ashenfelter & Karl Storchmann, 2010. "Measuring the Economic Effect of Global Warming on Viticulture Using Auction, Retail, and Wholesale Prices," NBER Working Papers 16037, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:16037
    Note: EEE IO CH
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w16037.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Wolfram Schlenker & W. Michael Hanemann & Anthony C. Fisher, 2006. "The Impact of Global Warming on U.S. Agriculture: An Econometric Analysis of Optimal Growing Conditions," The Review of Economics and Statistics, MIT Press, vol. 88(1), pages 113-125, February.
    2. Mendelsohn, Robert & Nordhaus, William D & Shaw, Daigee, 1994. "The Impact of Global Warming on Agriculture: A Ricardian Analysis," American Economic Review, American Economic Association, vol. 84(4), pages 753-771, September.
    3. Wolfram Schlenker & W. Michael Hanemann & Anthony C. Fisher, 2005. "Will U.S. Agriculture Really Benefit from Global Warming? Accounting for Irrigation in the Hedonic Approach," American Economic Review, American Economic Association, vol. 95(1), pages 395-406, March.
    4. Olivier Deschênes & Michael Greenstone, 2007. "The Economic Impacts of Climate Change: Evidence from Agricultural Output and Random Fluctuations in Weather," American Economic Review, American Economic Association, vol. 97(1), pages 354-385, March.
    5. repec:reg:rpubli:291 is not listed on IDEAS
    6. R.P. Byron & O. Ashenfelter, 1995. "Predicting the Quality of an Unborn Grange," The Economic Record, The Economic Society of Australia, vol. 71(1), pages 40-53, March.
    7. Orley Ashenfelter & Karl Storchmann, 2010. "Using Hedonic Models of Solar Radiation and Weather to Assess the Economic Effect of Climate Change: The Case of Mosel Valley Vineyards," The Review of Economics and Statistics, MIT Press, vol. 92(2), pages 333-349, May.
    8. Schnabel Hubert & Storchmann Karl, 2010. "Prices as Quality Signals: Evidence from the Wine Market," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 8(1), pages 1-23, February.
    9. Jones, Gregory V. & Storchmann, Karl-Heinz, 2001. "Wine market prices and investment under uncertainty: an econometric model for Bordeaux Crus Classes," Agricultural Economics, Blackwell, vol. 26(2), pages 115-133, November.
    10. John W. Haeger & Karl Storchmann, 2006. "Prices of American Pinot Noir wines: climate, craftsmanship, critics," Agricultural Economics, International Association of Agricultural Economists, vol. 35(1), pages 67-78, July.
    11. repec:bla:ecorec:v:71:y:1995:i:212:p:40-53 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Maria De Salvo & Roberta Capitello & Diego Begalli, 2014. "The estimation of climate change impacts on the adoption of sustainable production processes in viticulture: a multidisciplinary approach," International Conference on Competitiveness of Agro-food and Environmental Economy Proceedings, The Bucharest University of Economic Studies, vol. 3, pages 10-19.
    2. Ashenfelter, Orley & Storchmann, Karl, 2014. "Wine and Climate Change," Working Papers 164854, American Association of Wine Economists.
    3. Algieri, Bernardina & Iania, Leonardo & Leccadito, Arturo & Meloni, Giulia, 2024. "Message in a bottle: Forecasting wine prices," Journal of Wine Economics, Cambridge University Press, vol. 19(1), pages 64-91, February.
    4. Wienand Kölle & Andrea Martínez Salgueiro & Matthias Buchholz & Oliver Musshoff, 2021. "Can satellite‐based weather index insurance improve the hedging of yield risk of perennial non‐irrigated olive trees in Spain?," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 65(1), pages 66-93, January.
    5. Ashenfelter, Orley, 2017. "The Hedonic Approach to Vineyard Site Selection: Adaptation to Climate Change and Grape Growing in Emerging Markets," Journal of Wine Economics, Cambridge University Press, vol. 12(1), pages 3-15, February.
    6. Jesse Tack & Ardian Harri & Keith Coble, 2012. "More than Mean Effects: Modeling the Effect of Climate on the Higher Order Moments of Crop Yields," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(5), pages 1037-1054.
    7. De Salvo, Maria & Begalli, Diego & Capitello, Roberta & Signorello, Giovanni, 2015. "A spatial micro-econometric approach to estimating climate change impacts on wine firm performance: A case study from Moldavia region, Romania," Agricultural Systems, Elsevier, vol. 141(C), pages 48-57.
    8. R. P. Dayani Gunathilaka & James C. R. Smart & Christopher M. Fleming, 2017. "The impact of changing climate on perennial crops: the case of tea production in Sri Lanka," Climatic Change, Springer, vol. 140(3), pages 577-592, February.
    9. Eduardo A. Haddad & Patricio Aroca, Pilar Jano, Ademir Rocha, Bruno Pimenta, 2019. "A Bad Year? Climate Variability and the Wine Industry in Chile," Working Papers, Department of Economics 2019_37, University of São Paulo (FEA-USP).
    10. Jacobo Núñez & David Martín‐Barroso & Francisco J. Velázquez, 2024. "The hedonic price model for the wine market: A systematic and comparative review of the literature," Agricultural Economics, International Association of Agricultural Economists, vol. 55(2), pages 247-264, March.
    11. Storchmann, K., 2011. "Wine Economics: Emergence, Developments, Topics," International Journal of Agricultural Sciences and Technology (IJAGST), SvedbergOpen, vol. 50(3), September.
    12. Kym Anderson, 2010. "The New World in Globalizing Wine Markets: Lessons from Australia," Wine Economics Research Centre Working Papers 2010-09, University of Adelaide, Wine Economics Research Centre.
    13. Diego Begalli & Roberta Capitello & Maria De Salvo, 2013. "Evaluation of Climate Change Effects on the Wine Industry: An Interdisciplinary Approach," International Conference on Competitiveness of Agro-food and Environmental Economy Proceedings, The Bucharest University of Economic Studies, vol. 2, pages 14-26.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. De Salvo, Maria & Begalli, Diego & Capitello, Roberta & Signorello, Giovanni, 2015. "A spatial micro-econometric approach to estimating climate change impacts on wine firm performance: A case study from Moldavia region, Romania," Agricultural Systems, Elsevier, vol. 141(C), pages 48-57.
    2. Francisco Costa & Fabien Forge & Jason Garred & João Paulo Pessoa, 2023. "The Impact of Climate Change on Risk and Return in Indian Agriculture," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 85(1), pages 1-27, May.
    3. Meyer, Kevin & Keiser, David A., 2016. "Adapting to Climate Change Through Tile Drainage: A Structural Ricardian Analysis," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235932, Agricultural and Applied Economics Association.
    4. Eric Njuki & Boris E Bravo-Ureta & Christopher J O’Donnell, 2018. "A new look at the decomposition of agricultural productivity growth incorporating weather effects," PLOS ONE, Public Library of Science, vol. 13(2), pages 1-21, February.
    5. Massetti, Emanuele & Mendelsohn, Robert, 2017. "Do Temperature Thresholds Threaten American Farmland?," EIA: Climate Change: Economic Impacts and Adaptation 263482, Fondazione Eni Enrico Mattei (FEEM).
    6. Francisco Costa & Fabien Forge & Jason Garred & João Paulo Pessoa, 2020. "Climate Change and the Distribution of Agricultural Output," Working Papers 2003E, University of Ottawa, Department of Economics.
    7. Meyer, Kevin Michael, 2017. "Three essays on environmental and resource economics," ISU General Staff Papers 201701010800006585, Iowa State University, Department of Economics.
    8. Kaixing Huang, 2015. "The Economic Impacts of Global Warming on Agriculture: the Role of Adaptation," School of Economics and Public Policy Working Papers 2015-20, University of Adelaide, School of Economics and Public Policy.
    9. Yoro Diallo & Sébastien Marchand & Etienne Espagne, 2019. "Impacts of extreme events on technical efficiency in Vietnamese agriculture," CERDI Working papers halshs-02080285, HAL.
    10. Allan, Corey & Kerr, Suzi, 2013. "Examining Patterns in and Drivers of Rural Land Values," 2013 Conference, August 28-30, 2013, Christchurch, New Zealand 160191, New Zealand Agricultural and Resource Economics Society.
    11. Severen, Christopher & Costello, Christopher & Deschênes, Olivier, 2018. "A Forward-Looking Ricardian Approach: Do land markets capitalize climate change forecasts?," Journal of Environmental Economics and Management, Elsevier, vol. 89(C), pages 235-254.
    12. Jesse Tack & Ardian Harri & Keith Coble, 2012. "More than Mean Effects: Modeling the Effect of Climate on the Higher Order Moments of Crop Yields," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(5), pages 1037-1054.
    13. Wang, Yuhan & Lewis, David J., 2024. "Wildfires and climate change have lowered the economic value of western U.S. forests by altering risk expectations," Journal of Environmental Economics and Management, Elsevier, vol. 123(C).
    14. Sampson, Gabriel S. & Hendricks, Nathan P. & Taylor, Mykel R., 2019. "Land market valuation of groundwater," Resource and Energy Economics, Elsevier, vol. 58(C).
    15. Steven Passel & Emanuele Massetti & Robert Mendelsohn, 2017. "A Ricardian Analysis of the Impact of Climate Change on European Agriculture," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 67(4), pages 725-760, August.
    16. Sampson, Gabriel & Hendricks, Nathan P. & Taylor, Mykel R., 2018. "Land Market Valuation of Groundwater Availability," 2018 Annual Meeting, August 5-7, Washington, D.C. 274320, Agricultural and Applied Economics Association.
    17. Jonathan F. Fox & Price V. Fishback & Paul W. Rhode, 2011. "The Effects of Weather Shocks on Crop Prices in Unfettered Markets: The United States Prior to the Farm Programs, 1895-1932," NBER Chapters, in: The Economics of Climate Change: Adaptations Past and Present, pages 99-130, National Bureau of Economic Research, Inc.
    18. Zhang, Peng & Deschenes, Olivier & Meng, Kyle & Zhang, Junjie, 2018. "Temperature effects on productivity and factor reallocation: Evidence from a half million chinese manufacturing plants," Journal of Environmental Economics and Management, Elsevier, vol. 88(C), pages 1-17.
    19. Etienne ESPAGNE & Yoro DIALLO & Sébastien MARCHAND, 2019. "Impacts of Extreme Climate Events on Technical Efficiency in Vietnamese Agriculture," Working Paper c1221ee7-5311-4af0-b1b4-3, Agence française de développement.
    20. Storchmann, K., 2011. "Wine Economics: Emergence, Developments, Topics," International Journal of Agricultural Sciences and Technology (IJAGST), SvedbergOpen, vol. 50(3), September.

    More about this item

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:16037. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.