The current study employs the autoregressive distributed lag (ARDL) model and bounds testing
approach to contigration, proposed by of Pesaran et al., (2001), to estimate the long and short-run
impacts of climatic factors on agriculture output in Egypt over the period 1980-2020. Employed
climatic variables are per capita CO2 emissions, average temperature, and average rainfall in
addition to control variables that include per capita energy consumption (a proxy of mechanisation),
fertilizers use (a proxy for technology), rural populations as a percentage of the total population (as
a proxy of rural labour force), and domestic credit to the agriculture sector. Phillips–Perron unit root
tests confirm that some variables are stationary at level and other variables, including the dependent
variable, are individually integrated of order one. According to the ARDL results, there exists a
long-run equilibrium relationship between the Egyptian agriculture output and the explanatory
variables. In the long run, a 1% increase in CO2 emissions per capita will lead to a %3.72 decrease
in agriculture output but an increase of average annual temperature by 1% results in a rise of the
Egyptian agricultural value added by 2.962%. Rainfall is found to have a negative but insignificant
impact on agrarian output. Regarding the long-run effects of non-climatic factors, a 1% increase in
fertilizer use, energy consumption, percentage of rural population to total population, and credit to
agricultural sector would result in an increase of the agrarian production by around 1.3%, 4%, 13%,
and 0.26%, respectively. With regard to short-run dynamics, the error-correction term has the
expected negative sign implying that about 5% of any movements from disequilibrium are corrected
for within the same year. It is worth mentioning that the short-run elasticities are found to be lower
than their long-run counterparts. The short-run coefficient of fertilizers use has a negative and
significant impact of agrarian value added which could be explained by the fact that excessive
chemical fertilizer use can alter soil pH, increase pest attacks, acidify soil, decrease organic carbon,
and hinder plant growth and yield. Furthermore, the two-period lagged agriculture credit has a
negative significant influence on agricultural output. Smallholder farmers face lack of rural finance
and difficulty accessing credit due to lack of collateral. Rural labour force is found to significantly
and negatively influence agrarian output contradicting prior theoretical expectations. This could be
explained in terms of encroachment on agricultural land due to many factors including, inter alia,
rapid pace of urbanisation in rerecommendations include, inert alia, enforcing strict regulation of carbon emissions and
encroachment on agrarian land, promoting sustainable farming practices, efficient use of water
resources through drip and sprinkler irrigation, implementing new credit schemes to rural
agricultural centers, and reforming subsidised fertilizer system while raising farmers’ awareness regarding the optimal use of fertilizers.cent decades and political instability emerged in early 2011. Policy |
