Regional Impacts of Long-term Climate Change on Rice Production and Agricultural Income: Evidence from Computable General Equilibrium Analysis

Future climate change will affect rice production, but whether these changes will be beneficial or detrimental is unclear. The present study evaluates the effect of climate change on Japanese rice production, rice price, agricultural income, and regional economies by using a recursive-dynamic regional computable general equilibrium (CGE) model, which is associated with crop-growth and crop-quality models. Simulation results demonstrate that future climate change will increase overall Japanese rice production nationwide, but that the price of rice will decrease. As a result, agricultural income will decrease, despite increased production in northern and eastern Japan, such as Hokkaido, Tohoku, and Kanto (including Niigata prefecture). Climate change will not benefit rice farmers in these regions. However, the western region will benefit, despite the decrease in production, and the consumer surplus in most regions will increase. This happens because rice demand is inelastic and an increase in production results in a serious decline in price, which more than offsets the effects of climate change on production. As such, the impacts of climate change are complicated and differ by region, so a CGE model can provide useful information to consider policy countermeasures.