5. Economic Impact of Climate Change on Agriculture in SAT India: An Empirical Analysis of Impacts in Andhra Pradesh Using Ricardian Approach

This chapter analyzes the economic impact of climate change on agriculture for the state of Andhra Pradesh, India. The objective of this study is to quantify the impact of climate change on net revenue of paddy crop and 14 other major crops in the 20 districts of the state. The Ricardian approach was used to analyze the effects of climate variables on the net income from the crop. Panel datasets on climatic, agronomic and socio-economic variables were used for this analysis. The results showed that there is significant nonlinear impact of temperature and rainfall on yield over the years on the net income from rice and other crops. On an average in rice; 1 °C rise in temperature will reduce the net income by109 INR (2.42US$) per hectare in these districts and the impact of precipitation are not substantial. Among the analyzed districts, Anantapur face the maximum brunt of the impact of climate change. In case of other crops, there are varied impacts of different climatic variable on net revenue with some district gaining initially and negatively impacting later. As expected, rainfall had positive marginal impacts, however it is very negligible. The socio-economic variable i.e. amount of irrigated area, literacy rate of rural population also showed significant positive effects on the income.