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Previous Ricardian analyses of
agriculture have either omitted irrigation or treated
irrigation as though it is exogenous. In practice, it is a
choice by farmers that is sensitive to climate. This paper
develops a choice model of irrigation in the context of a
Ricardian model of cropland. The authors examine how climate
affects the decision to use irrigation and then how climate
affects the net revenues of dryland and irrigated land. This
Ricardian "selection" model, using a modified
Heckman model, is then estimated across 8,400 farmers in
Africa. The analysis explicitly models irrigation but
controls for the endogeneity of irrigation. The authors find
that the choice of irrigation is sensitive to both
temperature and precipitation. Simulations of the welfare
impacts of several climate scenarios demonstrate that a
model which assumes irrigation is exogenous provides a
biased estimate of the welfare effects of climate change. If
dryland and irrigation are to be estimated separately in the
Ricardian model, irrigation must be modeled endogenously.
The results also indicate that African agriculture is
sensitive to climate change. Many farmers in Africa will
experience net revenue losses from warming. Irrigated farms,
on the other hand, are more resilient to temperature change
and, on the margin, are likely to realize slight gains in
productivity. But any reduction in precipitation will be
especially deleterious to dryland farmers, generally the
poorest segment of the agriculture community. The results
indicate that irrigation is an effective adaptation against
loss of rainfall and higher temperatures provided there is
sufficient water available. This will be an effective remedy
in select regions of Africa with water. However, for many
regions there is no available surface water, so that warming
scenarios with reduced rainfall are particularly deleterious.
