Climate change, adaptation and China's grain production

- A regional and crop-specific total-factor-adaptation model is recommended.
- Economic impacts of climate change are mixed with some winners and other losers.
- With adaptation, warming is always beneficial to China's grain production.
- Grain production in eastern China would be more vulnerable to climate change.
- In China, adaptation by irrigation is not sensitive to climate change.

This paper measures the economic impacts of climate change on China's grain production by using provincial time series data over a 32-year period. The panel data model and time series region model with/without adaptation are applied at the same time to assess the effectiveness of a common production function. To capture the effects of weather variables we employ a random coefficients model where the production elasticities are the logarithmic function on temperature and rainfall. A Cobb-Douglas production function with additional interaction between inputs and climate variables is applied. We find that the economic impacts of climate change are mixed, that is, some regions are winners and others are losers, and the effect is crop-specific, not general. With adaptation, the economic impacts of warming on grain production are always positive; less precipitation will benefit rice production, but will harm wheat and maize production. Most of the central, western and northern China, which have already been adapted, are less sensitive to climate variables, but some eastern provinces, such as Shandong and Hebei, are very vulnerable. However, this study finds that the adaptation by irrigation is not sensitive to climate change. In summary, the analysis indicates that policymakers should recognize that the climate change would change the productivity of factors, so a regional and crop-specific total-factor-adaptation model is recommended.