Climate change and agriculture under CO2 fertilization effects and farm level adaptation: Where do the models meet?

Cutting-edge contributions intended to guide major decisions on investment and energy policy is relevant for climate change research. This study develops an innovative approach that combines three physical climate simulations (Geophysical Fluid Dynamics Laboratory model, Goddard Institute of Space Studies model, and the United Kingdom Meteorological Office climate model) with a general equilibrium model of global trade in order to study the real economic impacts of climate change. For the most part, climate change projected up to the year 2060 leads to welfare gains in the range of 0.07-1.4%, and welfare losses between 0.04 and 2.2% in some cases. All three climate simulations, point to welfare gains in China and marginal losses in low- and middle-income countries as a result of climate change. These findings underscore the importance of properly accounting for the direct effect of CO2 on crop growth and farm level adaptation, as ignoring these leads to substantial welfare losses in all examined regions. While a more systematic trade-off analysis is required for making strong generalizations, the broadest conclusion from the applied models is that, as long as CO2 fertilization effects and farm level adaptation are fairly included with the simulations, global agriculture does not appear to be particularly threatened by climate change. For this reason, agricultural policies aimed at mitigating CO2 emissions but problematic to food security, especially in developing countries, should be treated with caution.