A Ricardian analysis of Mexican farms

Abstract

ABSTRACTThis paper measures the impact of climate on Mexican agriculture using a Ricardian analysis. The analysis relies on economic data from 621 individual farms that were collected in 2002. Data on climate, elevation, soils, and distance to nearest city were matched with each farm. The analysis reveals that farmland values in Mexico are sensitive to climate. On average, warmer temperatures reduce land value by 4,000 to 6,000 pesos per degree Celsius. Examining three climate scenarios for 2100, the models predict average losses of between −42% to −54% of land value in Mexico. As a percent of income, rainfed farms will suffer slightly larger damages than irrigated farms but comparisons between small and large farms are mixed.