POTENTIAL ECONOMIC-EFFECTS OF CLIMATE-CHANGE ON FINNISH AGRICULTURE

In the assessment of the economic effects of climate change, changes i n returns and costs have to be taken into consideration. Changes in re turns are mainly caused by changes in the yield level. Costs are deter mined by various factors. Harvesting conditions may improve as the tem peratures are higher. However, an increasing need for disease and pest control results in higher costs. Various extensive studies have indic ated that rising temperatures with the CO2 fertilizing effect increase the crop potential in Finland. From the economic point of view an inc rease in yield level is highly significant, because the increase in co sts remains quite small. A 10% increase in the yield level raises the farm income by about 6%. Because agriculture is supported in many ways either directly or indirectly, the rise in income level may be offset by lowering the support. Consequently, farmers may not benefit from a n increase in the yield level, but the benefit will go to the state ec onomy. However, an increase in the yield level resulting from rising t emperatures is advantageous to the national economy, regardless of whe ther the benefit goes to the farmers or to the state.