Impact of Climate Variables on Revenue of Major Food Crops in Ghana : Ricardian Cross-Sectional Analysis <Article>

This study analyzes the impact of climate on net revenues of five major food crops in Ghana using 2005 national survey data. A multinomial logit regression is used to correct for crop selection bias in estimation of net revenue per hectare. Results of a multinomial logit regression show that farmers are likely to switch from the cultivation of maize, sorghum and rice to cassava and yam with marginal warming. Marginal increase in rainfall prompts farmers to switch from cassava and yam to the cultivation of maize, sorghum and rice. After incorporating selectivity bias, it was found that warming raises revenues from cassava, maize and sorghum but reduces that of rice and yam; additional rainfall reduces revenues of all crops except rice. With the exception of maize and sorghum, the choice of food crops to grow is motivated by higher net revenues per hectare obtainable from the cultivation of those crops. Marginal warming tends to increase expected net revenue in all ecological zones in Ghana but with much higher positive effect if farmers adapt to changing climate by switching crops. Marginal decrease in rainfall reduces expected net revenue in all ecological zones but reverses the losses into positive returns if farmers switch crops as a way of adapting to climate. This study suggests public investment in research on high yielding, heat and drought tolerant varieties of the above mentioned food crops in order to make crop switching a more beneficial exercise for farmers.