climate change. In terms of export crops, all three regions are projected to have sizeable gains, but Mindanao is projected to grow almost twice as fast as the other two regions. come levels of poor people, the majority of whom earn their income by providing unskilled labor. Climate change is projected to have positive effects on the wages of unskilled agriSUMMARY | APRIL 2010 cultural workers—that is, those having either no education or only a primary school education (Table 14). This positive trend is mainly generated through global climate effects, whereby higher international agricultural prices stimulate agricultural production, which in turn increases the demand for agricultural inputs (with the apparent exception of capital). Table 13. Climate impact on agricultural production by region, 2011–2050 Climate shock (yearly change from baseline) Commodities Productivity effect Global trade effect Total effect Percent (%) Total agriculture –0.02 0.16 0.15 Luzon –0.03 0.01 –0.02 Visayas –0.03 0.06 0.04 Mindanao –0.01 0.39 0.39 Staple crops –0.04 –0.02 –0.06 Luzon –0.04 –0.01 –0.04 Visayas –0.04 –0.03 –0.07 Mindanao –0.04 –0.06 –0.10 Export crops –0.01 0.93 0.95 Luzon –0.02 0.60 0.59 Visayas –0.02 0.46 0.45 Mindanao 0.00 1.13 1.16 Other crops 0.02 –0.01 0.01 Luzon 0.01 0.08 0.09 Visayas 0.01 0.04 0.05 Mindanao 0.02 –0.04 –0.02 Livestock –0.02 –0.07 –0.10 Luzon –0.02 –0.07 –0.10 Visayas –0.02 –0.07 –0.10 Mindanao –0.02 –0.07 –0.10 Source: Calculated by authors based on Phil-DCGE simulations results. Note: Staple crops comprise rice and corn; export crops comprise bananas, coconuts, coffee, sugar, and other fruits. Table 14. Climate impact on factor returns, 2011–2050 Climate Shock (yearly change from baseline) Global Productivity trade Total effect effect effect Percent (%) 0.01 0.09 0.09 Input factors Labor No education Primary education 0.00 0.06 0.06 Secondary education –0.01 –0.04 –0.05 Tertiary education –0.01 –0.05 –0.06 Land Luzon 0.03 0.21 0.24 Visayas 0.03 0.24 0.27 Mindanao 0.02 0.33 0.35 Livestock Luzon 0.02 0.10 0.12 Visayas 0.02 0.10 0.12 Mindanao 0.02 0.10 0.12 Capital Agricultural –0.01 –0.03 –0.04 Nonagricultural –0.01 –0.04 –0.06 Source: Calculated by authors based on Phil-DCGE simulations results This may suggest the country should develop a strategy to expand the export crop sector, and develop ways for poorer smallholder farmers to participate. Luzon has a comparative advantage in the category of “other crops” based on a positive overall climate change impact of almost twice the magnitude of the gain for Visayas; Mindanao, on the other hand, is projected to experience net losses in the productivity of other crops. Finally, livestock is projected to record losses across the country, both through direct declines in productivity and through the effects of global prices and trade. Wage levels for skilled labor are projected to fall slightly as a result of climate change, which is mainly driven by lower production in both the industry and service sectors due to lower (real) exchange rates. Returns to land and livestock, mainly owned by nonpoor rural households, also increase under climate change, and to an even greater level than the returns to unskilled labor. Higher return on unskilled labor and land are likely to cause income increases across all rural households in all regions, with landowners in Mindanao benefiting the most (from increased land prices). Hence, because the gains to land are higher than the gains to labor, rural people who also own land benefit more than those who don’t. The impact of climate change on income distribution is reflected in changes in “factor returns,” (that is, income, share for major types of production inputs. The factors for this study were differentiated as labor, land, livestock, agricultural capital and non-agricultural capital. Changes in the wage rate for labor have more influence in driving the in- 9

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