The Impact of Climate Change on the Income of Wine Producers in the Bordeaux Region

Abstract

In the Bordeaux region, climate change has a very significant impact on wine production, with an increase in vineyard area, but a decrease in yield and income. We use a Ricardian approach to assess the magnitude of these changes. We combine very detailed individual, structural and financial data at the farm level with weather data to measure the impact of climate change on vineyards. Econometric models highlight the important role of high temperatures and rainfall in reducing yields during the growing season. Farmers respond to these phenomena through a combination of strategies: increasing vineyard area, prioritising operational expenditure over long-term investment strategies and using adaptive risk management techniques such as irrigation and crop insurance. These results suggest that wine producers are effectively adapting to climate change and its adverse effects on yield and income volatility. Moreover, these strategies are differentiated according to the value and quality of the production.