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Review of Industrial Organization

, Volume 37, Issue 1, pp 51–64 | Cite as

Measuring the Economic Effect of Global Warming on Viticulture Using Auction, Retail, and Wholesale Prices

  • Orley Ashenfelter
  • Karl Storchmann
Article

Abstract

In this paper we measure the effect of year-to-year changes in the weather on wine prices and winery revenue in the Mosel Valley in Germany in order to determine the effect that climate change is likely to have on the income of wine growers. A novel aspect of our analysis is that we compare the estimates based on auction, retail, and wholesale prices. Although auction prices are based on actual transactions, they provide a thick market only for high quality, expensive wines and may overestimate climate’s effect on farmer revenues. Wholesale prices, on the other hand, do provide broad coverage of all wines sold and probably come closest to representing the revenues of farmers. Overall, we estimate a 1°C increase in temperature would yield an increase in farmer revenue of about 30%.

Keywords

Wine Global warming Auction prices Retail prices Wholesale prices 

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Copyright information

© Springer Science+Business Media, LLC. 2010

Authors and Affiliations

  1. 1.Economics DepartmentPrinceton UniversityPrincetonUSA
  2. 2.Economics DepartmentNew York UniversityNew YorkUSA

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