Extreme climate events and adaptation: an exploratory analysis of drought in Mexico

Abstract

Climate change is increasing the intensity of extreme weather events. Mexico is particularly prone to suffer at least two different types of these events: droughts and hurricanes. This paper focuses on the effects of an extended drought on the Mexican economy. Through a computable general equilibrium model, we simulate the impact of a drought that affects primarily agriculture, livestock, forestry, and hydropower generation. We look at the effects on the overall economy. We then simulate the effects of several adaptation strategies in (chiefly) the agricultural, forestry, and power sectors, and we arrive at some tentative yet significant conclusions. We find that the effects of such an event vary substantially by sector with moderate to severe overall impacts. Furthermore, we find that adaptation policies can only effect modest changes to the economic losses to be suffered.

Review article: Assessing the costs of natural hazards – state of the art and knowledge gaps

“…Strobl, 2011) 3. CGE models at the regional or national level (e.g., Rose et al, 1997;Islam, 2003;Rose and Liao, 2005;Tsuchiya et al, 2007;Berrittella et al, 2007;Boyd and Ibarrarán, 2009;Pauw et al, 2010;Wittwer and Griffith, 2010); 4. intermediary models between CGE models and Input Output models (e.g. Hallegatte, 2008).…”

“…Islam, 2003;Horridge et al, 2005;Berrittella et al, 2007;Boyd and Ibarrarán, 2009;Pauw et al, 2010;and Wittwer and Griffith, 2010) and Input Output models (e.g. Martin-Ortega et al, 2012;Pérez y Pérez and Barreiro-Hurlé, 2009) are often applied in practice.…”

Economics of Climate Change in the Arab World

“…This section draws on and gives an overview of the model, data, and assumptions. 2 The IMPACT model is a partial equilibrium agricultural model with 32 crop and livestock commodities, including cereals, soybeans, roots and tubers, meats, milk, eggs, oilseeds, oilcakes and meals, sugar, and fruits and vegetables. IMPACT has 115 country (or country-aggregate) regions, and within each region, supply, demand, and prices for agricultural commodities are determined.…”

“…Climate change would result in additional price increases of 32-37 percent for rice, 52-55 percent for maize, 11-14 percent for soybeans, and 94-111 percent for wheat ). 2 One of the assumptions of IMPACT is that second-generation (cellulosic) biofuels will be phased in after 2025 and replace food feedstock-based biofuels, and this is reflected in the slower rates of price increases after 2025. Livestock are not directly affected by climate change in the IMPACT model; however, the effects of higher feed prices caused by climate change pass through to livestock, resulting in higher meat prices.…”

“…Recent droughts have been especially damaging for small-scale farmers and herders, while affecting nonfarm households through reductions in real incomes from higher food prices. 2 In addition, reductions in wheat yields have made Syria a net wheat importer since 2007, creating macroeconomic changes to the balance of payments and concerns about macro-level food security. Although the damaging impacts of drought in Syria are clear, the potential size of losses to GDP and increases in poverty are not as well understood.…”