Can a Warmer Climate Save Northern Agriculture?
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Agriculture at high latitudes is expected to be a main beneficiary of a man-made climate change. A numerical model, using Norway as a case, is employed to analyze the impacts of a warmer climate on northern agriculture. The computations indicate that the current degree of self-sufficiency can be achieved with less budget support and higher economic welfare. However, it may be argued that environmental goods, such as landscape and biodiversity preservation, and rural settlement, are more important than self-sufficiency for northern agriculture. It is demonstrated that, in that case, welfare gains are substantially lower, and can even be negative.