This study accounts for the Hicks neutral technical change in a calibrated model of climate analysis, to identify the optimum level of technical change for addressing climate changes. It demonstrates the reduction to crop damages, the costs to technical change, and the net gains for the adoption of technical change for a climate-sensitive Pakistan economy. The calibrated model assesses the net gains of technical change for the overall economy and at the agriculture-specific level. The study finds that the gains of technical change are overwhelmingly higher than the costs across the agriculture subsectors. The gains and costs following technical change differ substantially for different crops. More importantly, the study finds a cost-effective optimal level of technical change that potentially reduces crop damages to a minimum possible level. The study therefore contends that the climate policy for Pakistan should consider the role of technical change in addressing climate impacts on the agriculture sector.
This paper gives a projection of the possible damage of climate change on the agriculture sector of Pakistan for the period 2012-2037, based on a dynamic approach, using an environment-related applied computable general equilibrium model (CGE). Climate damage projections depict an upward trend for the period of review and are found to be higher than the global average. Further, the damage to the agricultural sector exceeds that for the overall economy. By sector, climatic damage disproportionately affects the major and minor crops, livestock and fisheries. The largest losses following climate change, relative to the other agricultural sectors, are expected for livestock. The reason for this is the orthodox system of production for livestock, with a low adaptability to negative shocks of climate change. Overall, the findings reveal the high exposure of the agriculture sector to climate damage. In this regard, policymakers in Pakistan should take seriously the effects of climate change on agriculture and consider suitable technology to mitigate those damages.