Abstract
This paper covers a comprehensive economic analysis of climate change adaptation options for a specific wine producing region, namely Tuscany. As temperature increases under climate change, rainfall patterns will be different, and Chianti wine production in Tuscany therefore needs to adapt in the near future. We address the adaptation challenges and identify grape yield and quality loss as the main impact of climate change on wine production. Relocation of vineyards uphill and introducing drought-resistant varieties are considered as adaptation measures. We appraise these adaptation measures using an optimization framework, where regional wine producers maximize income subject to economic constraints including the climate change impacts on wine productivity and quality. Our simulation shows quantitatively to what extent a higher degree of climate change impact demands a higher degree of adaptation. We find that a combination of the two measures provides a better strategy because it leads to higher economic efficiency. However, uncertainty regarding the efficiency of the new variety discourages the use of this new drought-resistant variety, whereas a higher efficiency would make this choice more favourable. Sensitivity analysis for time horizon and discount rate confirms the theory of investment under uncertainty, showing a shorter time horizon (or more frequent investment) provides the possibility to postpone the decision to implement adaptation measures due to the value of flexibility, while a higher discount rate leads to a later adaptation decision, because uncertainty creates a value of waiting for new information.
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Notes
These parameters are, to the best of our knowledge, sufficiently reasonable and representative in order to allow us to illustrate the adaptation dilemmas facing wine producers. Further research will be required to provide better information on the values of the model parameters.
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Acknowledgments
This study is supported by the EU FP7 Mediation project under contract no. 244012. We are grateful for the very useful comments on the first draft from Rob Swart, Sandy Bisaro, Christian Siderius and Erik van Slobbe. Two anonymous reviewers and the editor are acknowledged for providing very useful comments for improving the readability of this paper. The comments made on the draft of this paper by Adam Walker are highly appreciated.
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Zhu, X., Moriondo, M., van Ierland, E.C. et al. A model-based assessment of adaptation options for Chianti wine production in Tuscany (Italy) under climate change. Reg Environ Change 16, 85–96 (2016). https://doi.org/10.1007/s10113-014-0622-z
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DOI: https://doi.org/10.1007/s10113-014-0622-z