The effect of policy leveraging climate change adaptive capacity in agriculture

Agricultural adaptation to climate change is indispensable. However, the degree of adaptation depends on adaptive capacity levels and it only takes place if the appropriate resources are present. Cross-sectional climate response models ignore this requirement. This paper adapts the Ricardian method to control for a generic territorial adaptive capacity index. The results for a sample of over 60.000 European farms show a significant non-linear positive relationship between adaptive capacity and climate responsiveness and that some regions in Europe can increase their climate responsiveness significantly. This confirms that improvement of adaptive capacity is an important policy tool to enhance adaptation.