Economic Commission for Latin America and the Caribbean Subregional Headquarters for the Caribbean LIMITED LC/CAR/L.323 22 October 2011 ORIGINAL: ENGLISH AN ASSESSMENT OF THE ECONOMIC IMPACT OF CLIMATE CHANGE ON THE AGRICULTURE SECTOR IN GUYANA __________ This document has been reproduced without formal editing. i Notes and explanations of symbols: The following symbols have been used in the present study: A full stop (.) is used to indicate decimals n.a. is used to indicate that data are not available The use of a hyphen (-) between years, for example, 2010-2019, signifies an annual average for the calendar years involved, including the beginning and ending years, unless otherwise specified. The word “dollar” refers to United States dollars, unless otherwise specified. The term “billion” refers to a thousand million. The boundaries and names shown and the designations used on maps do not imply official endorsement or acceptance by the United Nations. ii Acknowledgement The Economic Commission for Latin America and the Caribbean (ECLAC) Subregional Headquarters for the Caribbean wishes to acknowledge the assistance of Claremont Kirton, consultant, in the preparation of this report. iii Table of contents Notes and explanations of symbols: ................................................................................................................ i I. INTRODUCTION .......................................................................................................................................... 1 II. THE IMPACT OF CLIMATE CHANGE ON AGRICULTURE .................................................................. 2 A. CLIMATE CHANGE AND AGRICULTURE ....................................................................................................... 2 B. IMPACTS OF CLIMATE CHANGE ON CROP AND CROP PRODUCTIVITY .......................................................... 3 C. CLIMATE CHANGE: THE CARIBBEAN SITUATION ........................................................................................ 3 III. MODELS USED TO ESTIMATE THE IMPACT OF CLIMATE CHANGE ON AGRICULTURE .......... 6 A. STRUCTURAL MODELS ................................................................................................................................ 6 1. SPATIAL ANALOGUE MODELS ..................................................................................................................... 6 2. GENERAL CIRCULATION MODELS (GCMS) ................................................................................................. 6 3. ECONOMIC IMPACT ASSESSMENT MODELS ................................................................................................. 7 a) Crop simulation models .......................................................................................................................... 7 b) Agro-economic zone (AEZ) models ....................................................................................................... 7 c) Production function models .................................................................................................................... 7 d) The Ricardian model ............................................................................................................................... 8 IV. GUYANA: SOCIO-ECONOMIC BACKGROUND ..................................................................................... 8 A. POPULATION ............................................................................................................................................... 8 B. CLIMATE ................................................................................................................................................... 10 C. GEOGRAPHY .............................................................................................................................................. 11 D. ECONOMY ............................................................................................................................................. 12 E. AGRICULTURE ........................................................................................................................................... 13 1. Sugar ..................................................................................................................................................... 15 2. Rice ....................................................................................................................................................... 19 iv 3. Fisheries ................................................................................................................................................ 21 4. Forestry ................................................................................................................................................. 25 5. Livestock and non-traditional agriculture ............................................................................................. 27 V. QUANTIFYING AND PROJECTING CLIMATE CHANGE IMPACTS .................................................. 29 A. ECONOMETRIC MODEL AND DATA ............................................................................................................ 29 B. A PRIORI EXPECTATION OF CLIMATE CHANGE EFFECTS ........................................................................... 33 C. ECONOMETRIC METHODOLOGY ................................................................................................................ 33 D. FORECASTING METHODOLOGY ................................................................................................................. 35 E. MODEL RESULTS ....................................................................................................................................... 36 1. Bounds testing results ........................................................................................................................... 36 2. Estimated long-run (ARDL) relationships for sugarcane production (St) ............................................ 37 3. Estimated long-run (ARDL) relationships for rice production (Rt) ..................................................... 38 4. Estimated long-run (ARDL) relationships for fisheries production (Ft) .............................................. 39 F. THE PROJECTED COST OF CLIMATE CHANGE ON AGRICULTURE ............................................................... 40 VI. ADAPTATION ISSUES .............................................................................................................................. 42 A. SUGAR ....................................................................................................................................................... 44 1. Crop-specific measures ......................................................................................................................... 44 2. Education programmes for farmers ...................................................................................................... 45 3. Drainage and irrigation ......................................................................................................................... 45 4. Infrastructure, machinery and equipment ............................................................................................. 46 B. RICE .......................................................................................................................................................... 46 1. Crop-specific measures ......................................................................................................................... 46 2. Education programmes for farmers ...................................................................................................... 47 3. Drainage and irrigation ......................................................................................................................... 47 v 4. Infrastructure, machinery and equipment ............................................................................................. 47 C. FISHERIES .................................................................................................................................................. 47 VII. COST-BENEFIT ANALYSIS ...................................................................................................................... 48 A. SUGARCANE .............................................................................................................................................. 49 B. RICE PADDY .............................................................................................................................................. 50 C. FISHERIES .................................................................................................................................................. 52 D. SELECTED SUBSECTORS OF AGRICULTURE ............................................................................................... 53 VIII. CONCLUSIONS .......................................................................................................................................... 55 ANNEX ................................................................................................................................................................ 58 REFERENCES ..................................................................................................................................................... 60 vi List of Acronyms BAU business as usual CARICOM