The Economic Impact of Climate Change on Cash Crop Farms in Québec and Ontario

Abstract

This paper examines the economic impact of alternative climate change scenarios on representative cash crop farms in Quebec and Ontario. Mixed Integer Dynamic Linear Programming models are used to determine the annual optimal land and labor allocations over a 30 year time horizon. In the modeling process, five climate scenarios are modeled, along with different combinations of CO 2 enhancement and water limitation. Parameters, such as crop prices, costs of production, and crop yields, are simulated and projected into the future using various methods, such as Monte Carlo simulation, Crystal Ball Predictor and DSSAT cropping system model. Rotation and diversification constraints, as well as participation in public risk management programs are also incorporated into the optimization procedures. The results show that the economic impact of climate change varies by scenario, with the CO 2 effect and water limitation having a more significant effect than the specific climate scenarios. Technology development, as well as the public insurance programs can contribute to the reduction of economic vulnerability.