GLOBAL - Global warming could create substantial economic damage in agriculture, a new study conducted by a team of scientists of the Potsdam Institute for Climate Impact Research finds.
Climate change is expected to impact on productivity, forcing food prices up. As the additional expenditure for consumers outweighs producers' gains, increasing net economic losses will occur in the agriculture and food sector towards the end of the century.
However, economic losses could be limited to 0.3 per cent of global GDP - depending on agricultural trade policies.
The researchers combined 19 different climate projections with simulations of crop growth to assess economic impacts of climate change in the agricultural sector.
While the magnitude of damage varies with different assumptions on crop productivity response to climate change, CO2 plant fertilisation effect or socio-economic projection, the study still highlights the important role of trade as a key measure to partly reduce climate change impacts.
"Agriculture is very sensitive to climate change - even a small increase of global mean temperatures can have significant effects on regional crop yields, affecting both the profitability of agricultural production and the share of income spent on food," lead author Miodrag Stevanovic says.
"Our study quantifies economic impacts and analyses the role of international trade as an adaptation measure. We find that economic losses in agriculture could add up to the annual amount of roughly 0.8 per cent of global GDP at the end of the century with a very restricted trade regime.
"In contrast, further trade liberalisation in agricultural commodities could reduce financial damage globally by 65 per cent, to 0.3 per cent of global GDP."
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