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

Creative Commons Attribution 4.0 License
This work is licensed under a Creative Commons Attribution 4.0 License.

Rights

Licensed to Smith College and distributed CC-BY under the Smith College Faculty Open Access Policy.

Included in

Economics Commons

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