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%.
This is a preview of subscription content, access via your institution.
Buy single article
Instant access to the full article PDF.
Price excludes VAT (USA)
Tax calculation will be finalised during checkout.
Ashenfelter O. (2008) Predicting the prices and quality of Bordeaux wines. The Economic Journal 118(June): F174–F184
Ashenfelter O., Ashmore D., Lalonde R. (1995) Bordeaux wine vintage quality and the weather. Chance 8(4): 7–14
Ashenfelter O., Byron R. P. (1995) Predicting the quality of an unborn grange. The Economic Record 71(212): 40–53
Ashenfelter O., Storchmann K. (2010) Using hedonic models of solar radiation and weather to assess the economic effect of climate change: The case of Mosel Valley vineyards. The Review of Economics and Statistics 92(2): 333–349
Bernkasteler Ring. (1981–2008). Auktionsergebnisse. Annual Reports. Bernkastel-Kues: Bernkasteler Ring.
Deschênes O., Greenstone M. (2007) The economic impacts of climate change: Evidence from agricultural output and random fluctuations in weather. American Economic Review 97(1): 354–385
Diel, A., & Payne, J. (1994–2008). Wein Guide Deutschland. Munich: Wilhelm Heyne.
Haeger J. W., Storchmann K. (2006) Prices of American pinot noir wines: Climate, craftsmanship, critics. Agricultural Economics 35: 67–78
Intergovernmental Panel on Climate Change. (2007). Climate change 2007: Synthesis report. Geneva, Switzerland: IPCC.
Jones G., Storchmann K. (2001) Wine market prices and investment under uncertainty: An econometric model for Bordeaux crus classés. Agricultural Economics 26: 115–133
Mainzer Weinbörse. (1993–2001). Mainzer Weinbörse: Die Fachmesse für Gastronomie und Fachhandel. Mainz: Mainzer Weinbörse.
Mendelsohn R., Nordhaus W. D., Shaw D. (1994) The impact of global warming on agriculture: A Ricardian analysis. American Economic Review 84: 753–771
Peynaud E. (1984) Knowing and making wine. Wiley, New York
Schlenker W., Hanemann W. M., Fisher A. (2005) Will US agriculture really benefit from global warming? Accounting for irrigation in the hedonic approach. American Economic Review 95: 395–406
Schlenker W., Hanemann W. M., Fisher A. (2006) The impact of global warming on US agriculture: An econometric analysis of optimal growing conditions. Review of Economics and Statistics 88: 113–125
Schnabel, H., & Storchmann, K. (2010). Prices as quality signals: Evidence from the wine market. Journal of Agricultural & Food Industrial Organization, 8, Article 2.
Storchmann K. (2005) English weather and Rhine wine quality: An ordered probit model. Journal of Wine Research 16(2): 102–119
VDP Grosser Ring. (1992–2008). Auktionsergebnisse. Annual reports. Trier: VDP Grosser Ring.
About this article
Cite this article
Ashenfelter, O., Storchmann, K. Measuring the Economic Effect of Global Warming on Viticulture Using Auction, Retail, and Wholesale Prices. Rev Ind Organ 37, 51–64 (2010). https://doi.org/10.1007/s11151-010-9256-6