Impact Of Climate Change On Agricultural Land Values: An Application Of Ricardian Model In Punjab
Author: Syed Aqrar Hussain

The study instigates the incident of climate change and its impact on agricultural land value of Punjab primarily addressing the adaptation factor. A Ricardian analysis approach has been used to walk around the subject how idiosyncratic climate patterns affect land value in Punjab while considering twenty districts of the province Punjab. Data on agricultural land values for each district is taken from Punjab Economic Research Institute from 2004-2008. In order to estimate the climate change model, EGLS technique with cross section white covariance is used in the study. From the assessment it is very much clear that average rainfall has a highly significant U-shaped relationship with agricultural land values. It implies that 1mm increase in rainfall will result in decrease in agricultural land values by 650214 Pak rupees per hectare. On the other hand, the square term of average precipitation shows a positive and highly significant relationship which confirms the hill-shaped relationship among land values and climatic variables. This concludes that the present level of precipitation is inadequate for the agricultural land which results in departure of land value downward. Similarly, in case of humidity the linear relationship between land value and humidity is positive. . It predicts that if humidity increases by 1 per cent it results in increase in land value by 302798 Pak rupees per hectare. Unlike other studies, the present study predicts that maximum temperature plays a negligible role in farmer’s decision making. The study has given a broader look of the subject matter by including the district wise interactive dummies for each district to further elucidate the analysis. To see the VIII district wise effects of rainfall, we have included nineteen dummies as interactive terms in our estimated equation. Similarly, the same procedure has been carried out for the rest of the district dummies. This means that we have allowed slop coefficient for rainfall to vary from district to district. Our result shows that the highest positive effects of rainfall are in district Rawalpindi where one millimeter increase in average rainfall lead to increase the land value by more than a half million of Pak rupees. Supervisor:- Dr. Usman Mustafa

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Supervisor: Usman Mustafa

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