Measuring the Economic Impact of Climate Change on Crop Production in the Dry Zone of Myanmar: A Ricardian Approach

Abstract

Myanmar is the country with the highest economic vulnerability (EV) to climate change in the Southeast Asian region. The dry zone of Myanmar occupies two-thirds of the agricultural lands and it has higher temperatures than elsewhere in the country. Climate change has severe impacts on agricultural production in this region. Moreover, changes in the precipitation patterns increase the likelihood of crop failures in the short-run and production declines in the long run. Therefore, an assessment of the economic impacts of climate change on crop production in the dry zone of Myanmar is very relevant. This paper examines the interactions between agriculture and climate and assesses the economic impact of climate change while using a Ricardian model. A cross-sectional survey covering three regions in the central dry zone: (Magwe, Mandalay, and Sagaing regions) was conducted, yielding a sample of 425 farmers. A non-linear relationship between climate indicators (temperature and precipitation) and revenue of land was found. The marginal effects were calculated by selecting economic and socio-demographic variables. The estimated marginal impacts suggest that the projected changes in temperature will affect the crop productivity of the region. The results also show that the temperature and rainfall components of global warming are both important. Predictions from three global circulation models all confirm that temperature is predicted to increase in all seasons. A significant marginal impact of increasing temperature on the net revenue of farm households was observed in the region. These findings call for policy makers and development planners to articulate the necessary climate change adaptation measures and mitigation options for reducing the negative impacts of climate change. Improved management and conservation of the available water resources could generate water for irrigation purposes and the dissemination of climate smart agricultural practices could lessen the negative impacts of climate change effects on agriculture in the dry zone of Myanmar.