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one-fi fth of their level after World War II. The long-term decline in farm
prices has been driven by large-scale technological improvements in
that sector.
But what of the future? We have no crystal ball that tells us whether
the downward trend of past food prices will continue or reverse. Per-
haps the increased use of biofuels will increase the demand for crops
and drive up food prices (see Chapter 22). But the issue here is the dif-
ferential impact of global warming on farming. A climate-induced food
shortage would tilt the price trend shown in Figure 15 upward.
What do studies suggest? A review of world food models in the
that allow for adaptation and international trade generally showed that
warming would reduce world food prices relative to a no-warming base-
line for increases up to 3°C. These results are consistent with studies
that fi nd increasing agricultural yields up to 3°C temperature increase,
as shown in Figure 14. So one very important result of agriculture
models is that global warming is estimated to reduce rather than in-
crease food prices over the next few decades.
This leads to a third mitigating factor—the role of international
trade in agriculture. Increasingly, farming is a market activity, not a
subsistence activity. There is a world market for many agricultural prod-
ucts. This means that a shock to yields in one region will be cushioned
by the world market. Assume, for example, that wheat yields in Kansas
decline by 10 percent because of climate change. Calculations by schol-
ars like MIT economist John Reilly indicate that there will be virtually
no impact on food prices or on consumers because production of wheat
and other crops elsewhere in the world will largely fi ll the gap.
14
The fi nal mitigating factor is the declining share over time of agri-
culture in the economy and in the workforce. Most people are surprised
to learn how small the U.S. farm sector is. Farming declined from about
10 percent of GDP in 1929 to less than 1 percent by 2010. This trend is
seen around the world. The downward trend is most striking in East
Asia, where the share of agriculture fell from 40 percent in 1962 to 12
percent in 2008. Farming in sub-Saharan Africa is only 13 percent of
the economy, and the share has fallen sharply there as well. The move-
