Environment and Development Economics



Policy Options

The effect of development on the climate sensitivity of agriculture


ROBERT MENDELSOHN a1, ARIEL DINAR a2 and APURVA SANGHI a3
a1 Yale School of Forestry and Environmental Studies, 360 Prospect Street, New Haven, CT 06511, USA
a2 World Bank, 1818 H Street, Washington, DC, 20433 USA
a3 NERA, 1255 23rd Street, Washington, DC, 20037 USA

Abstract

This paper examines whether a country's stage of development affects its climate sensitivity. The paper begins with a model of agriculture that shows that the effect of development on climate sensitivity is ambiguous, depending on the substitution between capital and climate. To resolve this issue, the climate sensitivity of agriculture in the United States, Brazil, and India is measured using a Ricardian approach. Relying on both intertemporal as well as cross-country comparisons, the empirical analysis suggests that increasing development reduces climate sensitivity.