Farm response to climatic change: Exploratory analysis of Macedonian agriculture using the Ricardian modelling approach

Agriculture is one of most vulnerable sectors in the country, with the imminent intensification of global warming effects. In this paper, we attempt to assess the adaptation of Macedonian crop farmers to the impact of climate change. An alternative specification of the Ricardian model is adopted by using a composite aridity index to capture the response of farm returns to temperatures and precipitations. The econometric results indicate the significance of winter and summer season weather-related variables and confirm the non-linearity of the climatic function in relation to the farmers’ economic results and adaptation capacity. The farm returns are highly sensitive to different climate change scenarios and tend to decrease unless adequate adaptation and mitigation measures take place, both at micro and macro levels.