Impact Assessment and Loss Evaluation of Climate Change on the Economic Growth of Thailand's Agricultural Sector

This study investigates the impact of climate change on Thailand's agricultural sector, one of the very vital areas in the Thai economy. Using time series data from 1993 to 2023 and employing an Autoregressive Distributed Lag model, this study examines the relationship between climate variables-temperature and rainfall-and agricultural GDP. The findings indicate that there was a significant threat from climate change to agricultural productivity in Thailand. Specifically, a 1% rise in temperature reduces agricultural GDP growth by 1.58% in the short run and 1.23% in the long run, while an increase in rainfall variability by 1% reduces the growth in the short run by 0.15% and also declines in the long run by an equal magnitude of 0.14%. The study also analyzes other variables that affect the sector, including fertilizer application and agricultural employment. Increased fertilizer use is found to have a negative effect on agricultural GDP growth, reflecting potential inefficiencies in its application. Similarly, increased agricultural-labor employment does not result in a proportional increase in output. The combined estimated effect of climate change and the additional factors mentioned above on agricultural GDP could result in an annual contraction of 1.72%. Looking ahead, this would translate into a drop of 15 percent in agricultural GDP by 2027, based on no adaptation measures and thus huge economic losses. The key findings of this paper highlights the importance of resilience strategies to address climate changes via investments in climate-smart agriculture, enhancements in water management techniques, and sustainable farming through which these negative impacts can be mitigated or reduced.