The impact of Technology progress and Climate Change on Supply Response in YemenPasquale LucioScandizzoCentre for Economic and International Studies (CEIS), Faculty of Economics, University of Rome "Tor Vergata”Daniele Cufari Department of Economics Law and Institutions, Faculty of Economics, University of Rome “Tor Vergata”
1. Upper Highlands (above 1,900 m): temperate, rainy summer and a cool, moderately dry winter
2. Lower Highlands (below 1,900 m): Precipitation ranges from 0 mm to 400 mm and the temperature in the summer reaches 40°C.
3. Red Sea and Tihama Plain: tropical, hot and humid climate, while
rainfall averages only 130 mm annually and occurs in irregular, torrential storms.
4. Arabian sea cost: average temperature of 25°C in January and 32°C in June, with an average annual rainfall of 127 mm
5. Internal Plateau: characterized by a desert environment
Climate change poses a significant threat to Yemen’s development, with rising temperature projections and increasing in variance of rainfall
Climate-related hazards in Yemen include extreme temperatures, floods, landslides, sea level rise, and droughts.
The volatility of the yield is negatively related with the productivity
This negative effect, is enhanced by the increase of the variation of the rain, especially for the planting season
Dependent variable: Logarithm of maize yield
Independent variables: logarithm of average quantity and variance of rainfall in critical seasons
Rainfall variance has a negative effect in the winter and the fall and the variation of rainfall in the spring, a likely manifestation of climate change, has also a negative effect
Assuming that each option underlying value evolves as a Brownian Motion with zero drift and constant variance
where j denote the j-th option and i denote the i-th farmer. The economic value of the ith farm can be represented by the equation:
where is the value of the jthoption to adapt of the ith farmer and (Dixit and Pindyck, 1994). For adoption To be acceptable for option j:
here At farmer level, the option value over an infinite time horizon for farmers who have not adopted (yet) is given by:
where i. e. the coefficient estimated in the regression on an estimate of the increment of value added due to the adoption