Assessing the Impact of Climate Change on Agriculture in Indonesia: An ARDL-ECM Analysis

Abstract

Agricultural production in Indonesia is threatened by climate change. Future climate predictions show a significant increase in temperature and erratic rainfall with high intensity. We examined long- and short-term effects of climate change on Indonesian agriculture. Our estimation results demonstrate that issues of climate change significantly impact Indonesia’s agricultural output. Long-term climate change factors, such as temperature and rainfall, negatively impact Indonesian value-added agriculture, whereas primary factors, such as CO2 emissions, are unfavorable for crop yields. In the short run, other parameters, such as total greenhouse gas emissions, agricultural land area, and rural population, positively and significantly affect value-added agriculture. Moreover, fertilizer consumption has long-term beneficial effects on value-added agriculture in Indonesia. Our assessment shows that agriculture in Indonesia is quite vulnerable to climate change. These findings emphasize the importance of the government of Indonesia implementing concrete steps for climate change mitigation and adaptation, particularly in the agricultural sector.