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-
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