Global warming and German agriculture - Impact estimations using a restricted profit function

This study uses the concept of shadow prices for measuring the impacts of c limate change. By estimating a restricted profit function rather than a cos t or a production function the explanatory power of the model is increased because of an endogenous output structure. Using low aggregated panel data on Western German farmers, the results imply that the agricultural producti on process is significantly influenced by climate conditions. Simulation re sults using a 2 x CO2 climate scenario show positive impacts for all region s in Germany. Interestingly, the spatial distribution of the gains is indic ating no advantage for those regions, which currently suffer from insuffici ent temperature. Finally, the importance of an endogenous output structure is confirmed by the finding that the desired product mix will drastically c hange.