Microclimate Engineering for Climate Change Adaptation in Agriculture: The Case of California PistachiosJEL codes

Can farmers adapt to climate change by altering effective weather conditions on their fields? Existing technologies allow farmers to cool down plants by a few degrees during critical periods, reducing the damage from excess heat. With nonlinear effects of high temperatures on yields, slight cooling can bring significant gains in many crops. We call this approach "microclimate engineering" (MCE) and note that it could be useful as a climate change adaptation concept. Our case study deals with California pistachios, threatened by warming daytime temperatures in the winter. A new solution for sunlight reflection, based on products already used in other contexts and crops, could potentially help deal with this challenge. We develop a model to analyze grower choice and market outcomes with MCE for California pistachios. The expected increase in welfare for the period of 2020-2040 is assessed at 0.49-1.42 billion dollars under several scenarios. Simulation results show increases in consumer surplus and total welfare when MCE is available but decreases in aggregate grower profits. We also introduce market power to test its potential effects on the gains from MCE, finding mixed effects.