Results for income changes among urban households are mixed. The negative effect for upper-income urban households can be explained by the reduced return on skilled labor and capital, whereas for lower-income urban household, the higher return on low-skilled labor slightly improves their overall income levels. Nevertheless, rural households benefit more than the urban household across comparable income levels. POLICY IMPLICATIONS Crop Modeling Analyses of Direct Climate Impacts The direct impact of climate change on irrigated crops is less than the impact on rainfed crops, at least in regard to the two irrigated crops examined for this study. Climate change is projected to have large, negative impacts on maize, and the impacts are fairly uniform across the country—with the exception of Visayas, where the impact is slightly more negative. Careful analysis of monthly rainfall and temperature patterns with and without climate change indicates that these results are consistent with documented yield impacts of higher temperatures on maize. Because maize is such an important crop in the Philippines, results suggest that careful consideration should be given to adaptation strategies targeting maize, in particular. Furthermore, because yield losses are reasonably high for both rainfed rice and rainfed sugarcane in Luzon, and all major crops are projected to be affected, adaptation strategies in that region will require particular attention. This also limits the strategies for maize adaptation in Luzon because one of them, relevant in the rest of the country, is to cultivate alternative crops, such as rice or sugarcane. There are still possibilities for adaptation, however. Investment in agricultural research could result in heat-tolerant varieties of maize, rice, and sugarcane. The Rosegrant et al. (2014) study suggested that heat-tolerant varieties would only provide modest benefits, but that study used the AR4 climate models, and so perhaps did not project the same kind of losses resulting from this more recent analysis with the newer AR5 models. One possible alternative to heat-tolerant varieties that would nonetheless help with losses due to hotter temperatures would be the development of shorter-duration varieties that would allow farmers to plant in cooler months, and yet not miss out on months with suffi 10 cient rainfall for a good yield. Rosegrant et al. (2014) showed that no-till cultivation of maize could lead to much higher yields, as could improved pest protection, and—best of all— SUMMARY | APRIL 2010 integrated soil fertility management. For farmers who currently under-utilize fertilizer, increased use could be an effective means of adapting to climate change. This would especially be the case in the presence of rising food prices, which could in fact rise faster than fertilizer prices. Of course this does not necessarily mean the use of chemical fertilizers. Better use of manure or nitrogen-fixing plants—either as cover crops, through inter-cropping, or in rotation—might be an effective solution. In irrigated areas, slightly shifting the growing season for rainfed crops to avoid the hottest months is a potential strategy, as is supplementing rainfed crops with irrigation while still using irrigation for the off-season crops. Such a strategy will often require careful consideration of the impact on both crops. The use of shorter-duration varieties for both crops may also be of great benefit in enhancing the success of this adaptation strategy. In areas that do not currently have irrigation but have that potential, investment in irrigation may be highly beneficial in overcoming the limitations of rainfed agriculture, under which some farmers may otherwise be forced to plant in the hottest (albeit wettest) months. Finally, Rosegrant et al. (2014) noted reasonably large potential improvements in irrigated rice productivity from the implementation of precision agriculture. Policy Insights from the Phil-DCGE Model In a simulation experiment, the Phil-DCGE model was used to evaluate a couple of policies that would potentially assist the Philippines in adapting to climate change. These results are presented in more detail in Project Policy Note 1, but are worth reiterating here. The first was to evaluate the results of investment in agricultural research for the purpose of increasing rice productivity and close the yield gap by about 30 percent. The second experiment was to explore a policy of reduced trade barriers on agriculture and food commodities to minimize the increasing domestic commodity price in the event of climate change.