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Interview with Thomas Hertel on how climate change affects the poor.

September 2010. Volume 32 Issue 3.
Short description: Interview with Thomas Hertel, distinguished Professor in the Department of Agricultural Economics at Purdue University and Executive Director of the Center for Global Trade Analysis about his article featured article in AEPP: "Climate Change, Agriculture and Poverty."

Kristin Agard: Welcome to the Applied Economic Perspectives and Policy Podcast, a production of Oxford Journals and the Agricultural & Applied Economics Association. I'm Kristin Agard, Executive Director of the Agricultural & Applied Economics Association.

Recently I spoke with Thomas Hertel, distinguished Professor in the Department of Agricultural Economics at Purdue University and Executive Director of the Center for Global Trade Analysis about his article "Climate Change, Agriculture and Poverty." This featured article is published in the third issue of volume thirty-two of AEPP.

Thank you for joining me today Professor Hertel.

Your paper centers around the potential consequences of climate change for the poor. What are those consequences?

Thomas Hertel: Well, low income households, and I'm thinking primarily low income households in developing countries, are vulnerable to extreme climate events for a number of reasons. They typically live in more exposed locations on steep hillsides, for example, where mudslides occur after severe rainstorms, they live in low-lying areas where flooding is common, and they may live often near the seas where they're affected by tsunamis. So, they're inherently more vulnerable; their home, their family, are more vulnerable to damage from these kinds of extreme events. People who have more money are able to live in more secure locations.

The poor also spend a large share of their income on food and so they're vulnerable for this reason to shocks that affect agriculture. We know from past experience in the past few years when bad things happen around the world in major agricultural producing regions, prices rise sharply; and if you're spending seventy percent of your income on food and those food prices go up by fifty percent, you’ve got to cut back somewhere. So they're exposed for that reason as well.

They also, the poor in developing countries, also typically rely heavily on agriculture for their incomes and some of the poorest countries, as much as half of the population is largely self-employed in farming; so in this kind of an environment, if something bad happens to agriculture in terms of drought, too hot, too cold, too much rain, not enough rain, it can have a severe affect on the whole economy.

Kristin Agard: Are the poor more impacted by short-term climate volatility or long-term climate change? Can you explain why?

Thomas Hertel: So, that's a really important point. There are these two dimensions to climate change. The first, which we typically think of, we talk about global warming, we're often talking about temperature rising two degrees Celsius over the next few decades; a gradual warming of the planet and a shifting of rainfall. And so this gradual change in average or expected temperature and precipitation is important but it's a long-term phenomenon and it's something which, in many cases, that can be adaptation to that. The other dimension of climate change is climate volatility and that relates to the frequency and severity of extreme climate events such as drought, flooding and heat wave.

There's evidence that these kinds of extreme events are increasing both in frequency and severity with the concentration of greenhouse gases in the atmosphere. So, in the last-- just in the last year, we've seen some dramatic events, whether it's the flooding in Pakistan or droughts elsewhere and heat waves; taken individually these aren’t evidence of any long-term change, but taken together and viewed together with predictions that the climate scientists are making, they do seem to provide some validation for the climate scientists' predictions that these events are going to become more frequent in the future. And so these kinds of extreme events where in one year you’ve got a large share of your rainfall in a short period of time and it precipitates flooding means that the poor, who may be exposed to that flooding, their assets may be wiped out in that year. They're poor because they don’t have a lot of assets. If those assets, the few they have, are lost in that year, whether it's their home or livestock having to be sold or having to eat the livestock to stay alive, they won't have any assets to begin the next year and if another extreme event hits, they're in a very difficult situation. So, the two different kinds of climate change are important and I would argue that it's the climate volatility that is most important when we're thinking about the poor.

Kristin Agard: Your paper reviews three approaches to analyzing climate change and its impacts. Could you describe these approaches and briefly summarize their relative merits?

Thomas Hertel: Well, if we want to assess the impacts of climate change on agriculture we need to know not just what's going to happen to temperature, average and extreme temperature, precipitation, but we need to know how those translate through to affect crop yields. So, it's a hypothetical question because we haven’t yet seen that climate change. What if it occurs, how will it affect crop yields?

There needs to be some kind of quantitative analysis, a modeling approach to address that and there are three different approaches, as you point out. The first is a crop simulation approach and here the scientists build a computer model which mimics the critical stages in the crop growth process; it's a very detailed process kind of modeling the absorption of soil moisture into the plant, the allocation of carbon within the plant, very detailed, elaborate modeling and it's typically calibrated to real world data and they try to get this to mimic crop growth on a particular plot of land somewhere in the world. So it's very good for the level of detail offered.

It's unclear and yet unproven how well these kinds of crop simulation models are able to reflect what's going to happen in the country as a whole as opposed to on that one field. So the validation question, particularly at the country level is a limitation there.

A second approach, which is better on the validation front but has its own limitations, is a statistical approach where the researcher gathers data from many different regions and tries to isolate statistically the effect say at the national level of changes in the temperature, extreme temperature on yields; and these kinds of analyses can be validated at the country level out of sample prediction. If it predicts well out of sample, it's valid. If it doesn’t, it's not. But the quality of the estimates depends on the quality of the data coming in and that is a weakness particularly in some of the parts of the world most vulnerable to climate change. Latin America, well Africa in particular, parts of Asia; the data aren’t very good and that limits the ability of statistical analysis to be successful. The final approach and it's similar to the statistical approach, rather than looking at crop yields, this approach known as the "Ricardian Approach" focuses on land values.

So you can think of an area with very lush climate; you know, long growing season, lots of rainfall, having high land rents that be reflected in the land rents paid in agriculture. So this approach kind of factors in adaptation, that is, they don't care about what crop is grown, they just ask how valuable is that warmer weather or the additional rainfall. Of course, this is even more data restricted because it relies on well-functioning land markets. So really, none of these approaches is perfect but the work researchers working this area typically have to draw on all of them to get any sense of what's likely to happen.

Kristin Agard: What sort of potential adaptation strategies can the poor undertake to mitigate the effects of climate change?

Thomas Hertel: Well, the adaptation question is a very good one. It's very good because the policy reforms aimed at slowing emissions of greenhouse gases is moving very slowly. So the greenhouse gas concentrations are increasing rapidly and it seems like the climate is responding more rapidly, if anything, than had been predicted.

So it seems that adaptation is going to be an inevitable necessity for the poor in developing countries. And adaptation can consist of changing crops for example, in Africa, sub-Saharan Africa, maize is the predominant food crop and yet climate studies show that millet and sorghum are much more resilient to extreme temperature, such as they're likely to see in sub-Saharan Africa, increases in those temperature extremes. But if you're a subsistence household, what you grow you eat and so it involves not just changing what they grow, but changing what they eat and that doesn’t happen overnight. Livestock farmers in many parts of the world may wish to shift to more of a portfolio approach, have a mix of large and small animals. The small ruminants tend to be more robust to extreme climate events and so that's another adaptation strategy.

Probably the oldest form of adaptation to climate variability and climate change is migration and some of the tribes, the Masai in East Africa, for example, have long moved their herds around in response to changes in temperature and rainfall, but this form of adaptation is actually being threatened by increasing privatization of lands in the region. So adaptation is going to be critical; facilitating that adaptation will be important.

Kristin Agard: You mentioned that climate change requires broad engagement with various disciplines in society at large. Has there been much of this so far? And if so, what is the role of agricultural and applied economists in this process?

Thomas Hertel: Well, there is no doubt that assessing the impacts of climate change on agriculture and the poor is very multidisciplinary in nature. We'd need the climate scientists to predict likely changes in temperature and precipitation. We require ecologists, agronomists, and animal scientists to interpret how these will affect plant and animal growth. And agriculture and applied economists then come in and analyze the effective output changes on prices and incomes and ultimately poverty and nutritional outcomes. So, this kind of collaboration is essential. To be frank, it's still the exception rather than the rule but all of the indications are that future funding for research in this area is going to be directed towards more and more multidisciplinary in nature. If you aren’t involved in a multidisciplinary effort, it's going to be hard to be funded. So, I think the directions are pointing that way and there's an important role for agriculture and applied economists to play in that process.

Kristin Agard: What is the current policy environment vis-à-vis the low income farmers in developing countries? Do any of these countries have explicit policies aimed at improving the livelihood of the rural poor?

Thomas Hertel: Well, policies vary a lot by country and region. Historically, one of the most important facts has been that developing countries have implicitly penalized the poor by taxing agricultural products. If most of the poor grow agricultural products for their income and you tax those to raise money for the government, and then this is effectively taxing the poor; and this was the topic of Kym Anderson's paper in the last issue of AEPP, so I recommend that to you. Fortunately, as he documents there, trade and domestic policy reforms have reduced that type of discrimination.

In terms of constructive policies for poverty reduction, some of the most important ones are those that deliver of healthcare and education services to the rural areas. Children who suffer from debilitating illness, illiteracy; they're destined for a life of poverty and the best way to improve their prospects is to get healthcare to them, to get them in school and this, ultimately, is going to make them more resilient to climate change because if they have more schooling they're going to have more opportunities in life.

If things deteriorate in agriculture, they can move out of agriculture, they can find a job in the city or they can adapt. Staying in agriculture, they can find the new technologies and implement them in order to make their farm more resilient.

So, in general, fighting poverty is a good way to improve resilience to climate change, but it's a long process and it's a battle that we've been fighting for decades.

Kristin Agard: And lastly, what policy recommendations do you suggest to mitigate climate change effects on the poor?

Thomas Hertel: This is a good question. My co-author, Stephanie Rosch, and myself spent many hours debating this part of the paper and we do discuss this in our concluding sections' policy implications. You know, on the one hand there's an awful lot of uncertainty about future climate change and it's impact in agriculture, so one conclusion would be "Well, let's wait until that uncertainty is resolved before we try to do anything," but I think it's going to be a long time before that's resolved. This is a very difficult issue. I think in the meantime we have evidence that extreme climate events are occurring and they seem to be increasing in frequency and intensity and are having severe impacts on the poor.

So we conclude that moving ahead immediately with policies that will facilitate adaptation to climate change and extreme events but also policies that are good for economic development in general, because you don’t want to take funds away from say schooling for example, and invest it all in climate change adaptation only to find out it isn't going to be as severe as we thought.

It's important to have broad strategies which are also good for economic development. So there are quite a few things that fall in this category that we identify. One of those is governance of common pool resources such as forests and wildlife which the poor often rely on heavily for their livelihoods but which are often heavily exploited and vulnerable to climate change. Improvements in transportation and communication infrastructure so that when there is a drought in part of the country they can communicate that out, they can get the food in that needs to be delivered in order to offset the effects on nutrition of that drought, for example. So, improved infrastructure is very important. Irrigation, huge parts of Africa, very little of Africa is irrigated at present and there's great potential for modest irrigation and water management to have a big impact and help farmers overcome extreme precipitation events.

We also talk a lot in the paper about credit and insurance markets; this is an area that's getting a lot of attention and deserves certainly consideration; adaptive agricultural research, research that aims towards greater drought tolerance, for example, in crops; and finally, education; education is a good adaptation strategy because, as I indicated earlier, it's going to increase alternative employment opportunities for the poor and potentially, if it becomes necessary for them to migrate, to actually leave the area, improved employment will greatly improve their prospects and opportunities for that.

So, in short, climate change and climate volatility is a very significant threat to the poor, and particularly the poorest of the poor in developing countries and policies aimed at improving adaptation possibilities are a high priority in the future.

Kristin Agard: That was Professor Thomas Hertel from Purdue University. Look for his featured article on climate change and poverty in volume thirty-two, issue three or AEPP. If you have any feedback of follow-up questions for Professor Hertel, please send an email to podcasts@oxfordjournals.org.

If you are interested in learning more about AEPP or signing up for free AEPP content alerts, visit www.aepp.oxfordjournals.org. Or for more information about the Agricultural & Applied Economics Association, visit www.aaea.org. I'm Kristin Agard, thanks for listening.