Adaping to Climate Change Through Tile Drainage: Evidence From Micro Level Data
Department of Economics
Iowa State University
Thursday, January 31, 2019
Taylor-Hibbard Seminar Room (Rm103)
12:00 pm-1:15 pm
Climate change is expected to alter precipitation patterns in much of the U.S., requiring adaptation to mitigate damages where excess precipitation is harmful. Although tile drainage has been the key adaptive technology to reduce excess water in the past, it has received very little attention in the climate change literature. Using a simple conceptual model, we show that the value of precipitation should differ between drained and non-drained land. Thus, pooling lands that are tile drained and those that are not could bias estimates of the effects of climate change on land values. We test this hypothesis by estimating a Structural Ricardian model using farm-level data from the 2012 Census of Agriculture. Consistent with our theoretical model, our estimates show significant differences in the value of precipitation across tile drained and non-tile drained land. We calculate damages using the most recent, spatially detailed climate simulations available. We find that pooled models underestimate damages in the Cornbelt and southern regions and underestimates benefits in northern areas. Total estimated damages are $10.2 billion on an annual basis.