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This paper develops a Structural
Ricardian model to measure climate change impacts that
explicitly models the choice of farm type in African
agriculture. This two stage model first estimates the type
of farm chosen and then the conditional incomes of each farm
type after removing selection biases. The results indicate
that increases in temperature encourage farmers to adopt
mixed farming and avoid specialized farms such as crop-only
or livestock-only farms. Increases in precipitation
encourage farmers to shift from irrigated to rainfed crops.
As temperatures increase, farm incomes from crop-only farms
or livestock-only farms fall whereas incomes from mixed
farms increase. With precipitation increases, farm incomes
from irrigated farms fall whereas incomes from rainfed farms
increase. Naturally, the Structural Ricardian model
predicts much smaller impacts than a model that holds farm
type fixed. With a hot dry climate scenario, the Structural
Ricardian model predicts that farm income will fall 50
percent but the fixed farm type model predicts farm incomes
will fall 75 percent.
