One of the most vulnerable sectors to climate change is agriculture. Scientific research results have demonstrated that increasing concentration of greenhouse gases in the atmosphere will significantly impact the Earth's climate. Weather and climate greatly impact agricultural productivity. The predicted changes in temperature, rainfall patterns, water availability, extreme weather events, pests and diseases will all impact agricultural production. Research results suggest that global warming will unevenly affect different regions; some benefiting and some losing. What will be the situation in South-East Asia? This paper tends to investigate the potential impacts of climate change on agriculture and the world economy, with a special focus on South-East Asia.

The introduction (section 1) presents the issue of climate change and the importance of agriculture in South-East Asia. It is predicted that the average global surface temperatures will increase by 2.8 degrees Celsius during this century. This will alter natural climate and environmental systems with serious implications for humans' well being. Agriculture plays an important role in South-East Asia, weighing over 10 per cent of its gross domestic product (GDP) and providing employment for over one third of the working population. Nearly 3 poor out of 4 in the region live in rural areas and depend on agriculture. For the sake of poverty reduction, it is important to understand how global warming will affect agriculture.

Section 2 discusses the relationship between climate change and agricultural production. Researches demonstrate that there are thresholds for climate variables like temperature, radiation, rainfall and carbon dioxide (CO2) for crop yields. Moderate to medium increases in mean temperature (1 to 3 degrees Celsius) with associated CO2 increases and rainfall changes are expected to benefit crop yields in temperate regions. Yet, in low-latitude regions, even moderate temperature increases (1 to 3 degrees Celsius) are likely to have negative impacts on cereals. Warming of over 3 degrees Celsius will have a negative impact in all regions. Beside temperature and CO2 , global warming will increase extreme weather events like drought and flood as well as the patterns of pests and diseases which will negatively affect agricultural production. The authors' calculations based on crop estimation model suggest that South Asia and Africa will be the two regions most harmed by climate change. In South-East Asia, the damages to agriculture will be severe, ranging 15.1 per cent to 26.2 per cent depending on the country.

Furthermore, the global impact of climate change has been investigated. Section 3 presents the characteristics and assumptions of the dynamic model used in the estimation and section 4 presents the results. Global real GDP would decline by 1.4 per cent by 2080 as a result of the predicted impacts of climate change on agricultural productivity. New Zealand is the only country to expect a real GDP increase according to the estimates. Developing countries will suffer the largest GDP loss. Crop production in South Asia, Latin America and Sub-Saharan Africa would be the most adversely affected by climate change. Consequently, processed food and livestock production would also decrease with rising input costs. Domestic productivity reduction would be the major source of welfare losses in Indonesia, Philippines, Thailand and Viet Nam. In South-East Asia, the share of agricultural value added in volume terms would decrease from 10 per cent in 2004 to 4.1 per cent in 2080. The loss in real GDP would be 1.4 per cent for the region, in line with the global loss. However, due to the deterioration of terms of trade, most South-East Asian economies would have a larger welfare loss.

The paper is a good contribution to the debate on climate change impact on agriculture and the real economy. Some of the assumptions used in the estimates might look fair from the actual situation in many countries and it is important to be reminded that there are great uncertainties in economic prospects and projections. However, the paper has the merit to provide an illustration of the long-term impact of climate change. It underscores the importance of environmental protection policies for long-term economic growth. Agricultural technological progress will be of importance to cope with the potential risks from climate change and to reverse the declining agricultural productivity currently observed in South-East Asia.

Reviewed by Agbessi Komla Amewoa, Associate Expert, CAPSA, Bogor, Indonesia.