Do Western and Eastern Europe have the same Agricultural Climate Response? The Importance of a Large Adaptive Capacity

Abstract

Current cross-sectional methodologies measuring climate change impacts, assume that regions at the same latitude face a similar climate response and thus have the same adaptive capacity. This paper proofs that this assumption is erroneous in the European Union. It does so by ameliorating the Ricardian methodology by restricting which farmers (and therefore which adaptation options) are allowed in the dataset. In doing so, a comparative Ricardian methodology is suggested that allows for the first time to examine how the climate responsiveness of a region changes if adaptive capacity changes. This paper combines climate, soil, geographic, socio-economic, and farm-level data in a linear mixed-effect model and examines whether Eastern and Western Europe have the same climate response and how their climate responses change if regional adaptive capacity increases. It concludes that both regions currently have a significantly different climate response, but that if Eastern Europe were to implement the same adaptation options as Western Europe, it could avoid a large decrease in land value and even benefit from climate change depending on the climate scenario.