Academic journal article Journal of Sustainable Development

Impact of Natural Hazards on Agricultural Economy and Food Production in China: Based on a General Equilibrium Analysis

Academic journal article Journal of Sustainable Development

Impact of Natural Hazards on Agricultural Economy and Food Production in China: Based on a General Equilibrium Analysis

Article excerpt

Abstract

Based on a standard general equilibrium model for China's macro economy with multi-regional sectors, including water, croplands, agricultural labor and rural households, this study estimated the impact on the agricultural economy and food production from natural hazards in 2007 and considered two simulations: i) the drought-exempt case, which supposed that a drought did not occur; ii) the flood-exempt case, which supposed that a flood did not occur. The discussion focuses on the results obtained from the drought-exempt case, which was similar to but more significant than the flood-exempt case, because the drought in 2007 was the most widespread in recent years and was also more serious than the flood. In both cases, real GDP obtained insignificant positive effects contributed by the rise of agricultural output, but the effects on nominal GDP was negative. All agricultural productions increased their outputs and exports, especially for sorghum, oil seed and corn. Another finding was that more capital and less labor were related to most crop productions. All food productions also increased their outputs and exports, thus their energy inputs increased, especially for sugar, meats and vegetables. Households benefited from lower prices for all agricultural and food products from more domestic outputs and fewer imports. However, more food consumption and higher welfare occurred in urban households rather than in rural households. This was due to the declines in the returns of cropland and in the wages of agricultural labor. The worst rural households were located in Shandong, Henan, Hebei, Yunnan, Anhui, and Heilongjiang.

Keywords: natural hazards, agricultural economy, food production, CGE model, multi-regional sectors

1. Introduction

In the past several decades, regional and paroxysmal meteorological disasters have dominated in many parts of China, causing great economic losses and affecting local sustainable development (Chen & Yang, 2013). China's recent relentless droughts and floods have threatened millions of lives and agricultural production. Such impacts include the loss of US $ 6 billion and the lack of water for 23 million people during the drought in the southwest in early 2010 and losses of US $ 40 billion and 2, 000 deaths due to flooding in 2011 (Li, 2012). With respect to agriculture, unforeseen crop failures caused by natural hazards may also be instrumental in the reported losses. This paper uses a computable general equilibrium model with an energy module (CGE-Energy model) to quantify the effect of regional natural hazards (droughts and floods) on the agricultural economy and food production as well as their effects on regional rural households.

2. Background Literature Review and Hypothesis

2.1 Regions Affected by Natural Hazards

In China, droughts have been widespread and have caused serious losses in throughout history while floods, on the other hand, are the most frequent natural disaster. According to Figure 1, droughts have affected larger areas than floods over these years. The most widespread drought occurred in 2007, where the nationally cultivated area affected by the drought was 16169.9 ha, an area that accounts for 10.54% of the total land area. The flood-affected area was 5104.7 ha in this same year, which was the third worst loss for 2007.

The distribution of the occurrence of natural disasters and their impact is a reflection of the regional disparities in physical geography as well as the social and economic development of China (Liu, Yang & Li, 2012). With respect to the impact of natural disasters on regional development, the frequency of the disasters or the absolute loss in agriculture becomes the main consideration. Simelton (2011) contends that between 1955 and 2008, the southern parts of China experienced less severe drought impacts compared to the northern provinces, and the same or more intense flood impacts compared to the northern and southwestern provinces. …

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