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homework5answer - EEP 101/ECON 125 Problem Set#5 Suggested...

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EEP 101/ECON 125 Problem Set #5 Suggested Solutions Page 1 of 5 1) The Impacts of Climate Change Crop Profits Before and After Climate Change p & south north ± a) I drew the new profit curves everywhere to the right of the old profit curves. This represents the northward shift due to increased temperatures from climate change. I also drew the new profit curves with higher maximum profits. I think this is possible due to the fertilization effect of climate change. Those regions with a higher “after climate change” profit curve will be better off, while those regions with lower “after climate change” profit curves will be worse off. See the graph. b) In one page or less, discuss the uses of this model. How can such things as 1) the fertilization effect, 2) the speed of climate change, 3) pests, 4) geography, and 5) transition costs, affect the magnitude and distribution of the impacts of climate change? Predict where, and under what circumstances, the impacts of climate change will be the most severe. Why do you think this? Support your argument using economic reasoning. The two crop model we have developed can be used to examine the distribution of climate change impacts. If we assume that climate change will simply raise global temperatures, then the only result will be a shift in benefits away from the equator. However, this is too simplistic, and there are other impacts that should be examined.
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EEP 101/ECON 125 Problem Set #5 Suggested Solutions Page 2 of 5 Fertilization Effect An increase in the atmospheric CO 2 concentrations may actually increase crop yields because CO 2 is an important determinant of plant growth levels. Speed of Climate Change If climate change occurs slowly, we will have adequate time to slowly adapt and adjust to its implications. However, rapid climate change could be difficult to adjust to, resulting in higher than expected costs. Pests Global warming will not only cause the transition of plants, but also the displacement of animals and insects. Since large plants are relatively fixed, this will mean the presence of new pests in areas previously too cold for pests, which may harm yields. Geography The overall yield of crops is largely determined by the amount of land that a crop is grown on. If there exists more land in areas that, ceteris paribus, will benefit from warmer temperatures, there will be a net increase in benefits after climate change. Political and geographical constraints may also limit the ability of individuals to adapt to climate change. Transition Costs Our model assumes that individuals will grow whichever crop yields the highest profit. However, there may be transitions costs associated with switching from the cold crop to the warm crop, or costs for those areas that have not previously cultivated crops As a result of these other considerations, it seems that the greatest potential for detrimental impacts of climate change exist in those areas that will be forced to undergo the most change, while under the most constraints. An area that contains little potential
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homework5answer - EEP 101/ECON 125 Problem Set#5 Suggested...

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