Analysis of social welfare impact of crop pest and disease damages due to climate change: a case study of dried red peppers

Abstract Climate change can affect agricultural production both directly and indirectly. The direct impact is through climate change itself while the indirect impact is through the outbreak of pests and diseases (P&D) affected by climate change. We measured the difference in social welfare change of dried red peppers in monetary values between these two effects based on constructed three models. In the P&D damage model, the effects of climatic factors on P&D damages were analyzed. In the yield model, the direct and indirect effects of climatic factors on the dried red pepper yields were analyzed. Lastly, the effect of rising temperatures on the social welfare of dried red peppers was measured in monetary values using the equilibrium displacement model (EDM). As a key result, although these rising temperatures increase the yields and social welfare, there are differences in social welfare change between with and without P&D damages, and the difference increases over time. This implies that global climate change can affect agricultural production around the world, which can affect food security around the world beyond changes in crop prices and social welfare. So rigorous pest control and damage predictions are needed.