Climate Change and Agriculture: An Integrated Approach to Evaluate Economy-wide Effects for Turkey1

Effects of climate change in Turkey, which is already a water stressed country, are expected to be significant. The aim of this paper is to quantify the effects of climate change on overall economy by using an integrated framework incorporating a computable general equilibrium model and a crop water requirement model for the period 2010-2099. Since agriculture is the most important sector that will be affected by climate change, analysis of climate change effects on the overall economy necessitate taking into account backward and forward linkages of agriculture. The CGE model used in this paper models the links between agriculture and other sectors and economic agents at 12 NUTS1 regions level. On the other hand, the crop model is used to translate the results of global climate models to estimate changes in yields and irrigation requirements for the period 2010-2099 at 81 NUTS3 level for 35 crops. The results of the crop model are then introduced to CGE model as climate shocks. The results suggest that the economic effects of climate change will not be significant until late 2030s; therefore Turkey has a chance to develop appropriate adaptation policies. However after 2030s, effects of climate change will be significant. Production patterns and relative prices will change drastically. The economic effects will differ among regions. The regions where irrigated agriculture is relatively low, the effects will be milder suggesting a need for putting more emphasis on the region-specific climate change policy design. Agriculture and food production will be the most affected sectors. Increasing irrigation requirements will cause farmers to reduce irrigated production. Combined with decline in yields, this will cause significant deterioration in agricultural production and prices will increase. The loss in household welfare will be significant. Some part of production decline will be compensated by imports, causing an increase in agrofood trade which will cause trade balance to worsen with declining manufacturing exports due to increasing cost of production