An economic analysis of anthropogenic climate change on local rice output in Malaysia

Rice is an important staple food in Malaysia and represents a substantial household expenditure. Although the average rice consumption in Malaysian households has dropped due to preference change, total demand has increased. This can be attributed to the high population growth. Malaysian rice farmers have not been able to meet the country’s demand. Hence, Malaysia imports large quantities of rice from neighbouring countries to supplement its rice stockpile. Malaysia, which imports about 40 percent of its rice, is the 10th largest importer of rice in the world. This makes Malaysia susceptible to global rice crisis, similar to the one in 2008. To solve this problem, the government implemented policies to safeguard the country’s food security and self-sufficiency levels. These efforts may be difficult in the future, as climate projections have shown that climate change will affect countries in the tropics most negatively with increased temperature and flooding due to anthropogenic carbon dioxide emissions. This study analysed the effect of anthropogenic carbon dioxide emissions on rice production in Malaysia during the period 1970-2013. The analysis incorporated the following variables: total local rice production, carbon dioxide emissions, precipitation, land used for paddy farming, total rice imports, and global average crude oil prices. The assessment of the impact of these determinants on rice production was achieved using the Vector Error Correction Model (VECM). The results indicated that in the long-run, climate changes will affect rice cultivation in the country, with carbon dioxide negatively affecting output, and increased rainfall positively affecting output. In the short-run, only precipitation and land showed effects on rice production. The significance of the error correction term also inferred that a long-run relationship exists. This study showed that climate variations in the future should be taken into consideration when formulating policies to ensure Malaysia’s rice stockpile.