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Modeling technical change in climate analysis: evidence from agricultural crop damages

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Abstract

This study accounts for the Hicks neutral technical change in a calibrated model of climate analysis, to identify the optimum level of technical change for addressing climate changes. It demonstrates the reduction to crop damages, the costs to technical change, and the net gains for the adoption of technical change for a climate-sensitive Pakistan economy. The calibrated model assesses the net gains of technical change for the overall economy and at the agriculture-specific level. The study finds that the gains of technical change are overwhelmingly higher than the costs across the agriculture subsectors. The gains and costs following technical change differ substantially for different crops. More importantly, the study finds a cost-effective optimal level of technical change that potentially reduces crop damages to a minimum possible level. The study therefore contends that the climate policy for Pakistan should consider the role of technical change in addressing climate impacts on the agriculture sector.

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Notes

  1. Contributes 21% to gross domestic product (GDP) and 44% to employment in 2013–2014.

  2. Climate change mitigation refers to efforts to reduce or prevent emission of greenhouse gases. Mitigation can mean using new technologies and renewable energies, making older equipment more energy efficient, or changing management practices or consumer behavior.

  3. Adaptation is the principal way to deal with the impacts of a changing climate. It involves taking practical actions to manage risks from climate impacts, protect communities and strengthen the resilience of the economy.

  4. The simple nature of the model is retained because it provides transparent unification of growth theory and climate science with few equations that can be easily understood and manipulated.

  5. Climate change is a typical example of a public good that entails the global common good, and climate damage in one country will also bring calamities to other countries.

  6. The fluctuating parameters are (i) initial concentration in atmosphere, (ii) initial concentration in upper and lower strata, (iii) equilibrium concentration atmosphere, (iv) equilibrium concentration in lower and upper strata, (v) equilibrium temperature impact (0 °C per doubling of CO2), (vi) initial lower stratum temperature change (0 °C from 1900), (vii) initial atmospheric temperature change (0 °C from 1900), and (viii) climatic damage intercepts.

  7. Appendix 3 shows the sector-specific output of all downstream agricultural sectors. All the sectors are grouped into three categories. Categories A, B, and C refer to major crops, minor crops, and meat and milk, respectively.

  8. These are the damages calculated with zero level of additional technical change in the PCE model, and represented as P in Table 1.

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Authors and Affiliations

  1. Faculty of Economics and Administration, University of Malaya, Kuala Lumpur, Malaysia

    Adeel Ahmed & Evelyn S. Devadason

  2. Department of Management Science, COMSATS Institute of Information and Technology, Abbottabad, Pakistan

    Adeel Ahmed

  3. International Business School (IBS), Universiti Teknologi Malaysia (UTM), Johor Bahru, Malaysia

    Abul Quasem Al-Amin

  4. Institute of Energy Policy and Research (IEPRe), Universiti Tenaga Nasional (UNITEN), Selangor, Malaysia

    Abul Quasem Al-Amin

Authors
  1. Adeel Ahmed
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  2. Evelyn S. Devadason
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  3. Abul Quasem Al-Amin
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Correspondence to Adeel Ahmed.

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Responsible editor: Philippe Garrigues

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Ahmed, A., Devadason, E.S. & Al-Amin, A.Q. Modeling technical change in climate analysis: evidence from agricultural crop damages. Environ Sci Pollut Res 24, 12347–12359 (2017). https://doi.org/10.1007/s11356-017-8747-5

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