Document Type
Article
Publication Date
6-2016
Publication Title
Climatic Change
Abstract
Downscaled climate change projections for California, when translated into changes in irrigation water delivery and then into profit from agriculture in the Central Valley, show an increase in conventional measures of variability such as the variance. However, these increases are modest and mask a more pronounced increase in downside risk, defined as the probability of unfavorable outcomes of water supply or profit. This paper describes the concept of downside risk and measures it as it applies to outcomes for Central Valley agriculture projected under four climate change scenarios. We compare the effect of downside risk aversion versus conventional risk aversion or risk neutrality when assessing the impact of climate change on the profitability of Central Valley agriculture. We find that, when downside risk is considered, the assessment of losses due to climate change increases substantially.
Keywords
downside risk, climate change, variability, agriculture, outcome distribution, water resources
Volume
137
Issue
1-2
First Page
15
Last Page
27
DOI
10.1007/s10584-016-1651-z
Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.
Rights
Licensed to Smith College and distributed CC-BY under the Smith College Faculty Open Access Policy.
Recommended Citation
Hanemann, Michael; Sayre, Susan Stratton; and Dale, Larry, "The Downside Risk of Climate Change in California’s Central Valley Agricultural Sector" (2016). Economics: Faculty Publications, Smith College, Northampton, MA.
https://scholarworks.smith.edu/eco_facpubs/2
Comments
Peer reviewed accepted manuscript.