| Abstract: |
In this paper we provide a simple, credible method for assessing the effects
of climate change on the quality of agricultural land and then apply this
method using a rich set of data on the vineyards of the Mosel Valley in
Germany. The basic idea is to use a simple model of solar radiation to measure
the amount of energy collected by a vineyard, and then to establish the
econometric relation between energy and vineyard quality. Coupling this
hedonic function with the elementary physics of heat and energy permits a
straightforward calculation of the impact of any climate change on vineyard
quality (and prices). We show that the variability in vineyard quality in this
region is due primarily to the extent to which each vineyard is able to
capture radiant solar energy, so that these data provide a particularly
credible “experiment” for identifying and measuring the appropriate hedonic
equation. Our empirical results indicate that the vineyards of the Mosel
Valley will increase in value under a scenario of global warming, and perhaps
by a considerable amount. Vineyard and grape prices increase more than
proportionally with greater ripeness, so that we estimate a 3°C increase in
temperature would more than double the value of this vineyard area, while a
1°C increase would increase prices by about 20 percent. |