Economic Impact of Climate Change on Wheat and Cotton in Major Districts of Punjab

The long run impact of climate change on the productivity of major crops in the districts of Punjab is analyzed for the time period of 1970 to 2010. This study used deviations from average maximum annual temperature and deviations from average rainfall are used as indicators for climate change. While other variables include sale price, fertilizer use and number of tube wells. In order to incorporate long timer periods, this study used Panel ARDL model. The results show that cotton productivity is more positively sensitive to price changes; an increase in temperature, tube wells and fertilizers while wheat productivity is more positively sensitive to the rainfall in the long run. Consequently, in the short run, wheat productivity equilibrium is faster converging. Hence deviations from average rainfall are harmful to cotton crop in the long run and cotton & wheat in the short run, while deviations in maximum temperature is only harmful for cotton crop in the short run.