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

Orley Ashenfelter, Karl Storchmann

Research output: Contribution to journalArticle

19 Scopus citations

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%.

Original languageEnglish (US)
Pages (from-to)51-64
Number of pages14
JournalReview of Industrial Organization
Volume37
Issue number1
DOIs
StatePublished - Jul 13 2010

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics
  • Strategy and Management
  • Organizational Behavior and Human Resource Management
  • Management of Technology and Innovation

Keywords

  • Auction prices
  • Global warming
  • Retail prices
  • Wholesale prices
  • Wine

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