Environment and Development Economics

Research Article

A Ricardian analysis of Mexican farms

ROBERT MENDELSOHNa1, JESUS ARELLANO-GONZALEZa2 and PETER CHRISTENSENa3

a1 School of Forestry and Environmental Studies, Yale University, 195 Prospect Street, New Haven, CT 06511, USA. Phone:1–203-432–5128, Email: robert.mendelsohn@yale.edu

a2 Program of Studies on Economic Change and Sustainability of the Agricultural Sector in Mexico (PRECESAM), Center of Economic Studies, El Colegio de México A.C. Camino al Ajusco 20, Pedregal de Santa Teresa, México, D.F. 10740 Email: jagonzalez@colmex.mx

a3 School of Forestry and Environmental Studies, Yale University, 195 Prospect Street, New Haven, CT 06511, USA. Email: peter.christensen@yale.edu

ABSTRACT

This 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.

(Received March 08 2009)

(Revised June 25 2009)

(Accepted September 25 2009)

(Online publication December 08 2009)