Adaptation and Climate Change Impacts: A Structural Ricardian Analysis of Farm Types in Germany

Based on farm census data, we explore the climate-dependent incidence of six farm types and the climate-induced impacts on land rental prices in Germany. We apply a structural Ricardian approach by modeling the dominant farm type at 9,684 communities as depending on temperature, precipitation and other geographic variables. Rents per farm type are then modeled as depending on climate and other conditioning variables. These results allow the projection of the consequences of climate change as changes in our climate variables. Our results indicate that permanent-crop farms are more likely to dominate in higher temperatures, whereas forage or mixed farms dominate in areas of higher precipitation levels. Land rental prices display a concave response to increases in annual precipitation, and appear to increase linearly with rising annual temperature. Moderate-warming simulation results for future decades benefit most farm types but seem to penalise forage farms. Rental prices are projected to increase, ceteris paribus, for all farm types.