Climate variability and agricultural policy reform in Morocco
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Two distinctive features seem to be driving the agricultural sector in Morocco. The first appears to be an increased frequency of drought, with six of ten years in the 1990s characterized as drought years. The second is the continued protective policy that the government maintains on strategic agricultural commodities, primarily cereals. We employ an enhanced general equilibrium model that examines the long run impacts of trade liberalization policy under alternative climate outcomes. Our results indicate that returns to factors of production are bid up under favorable climate and decline dramatically in the bad state of nature. This behavior is transmitted to households welfare. With complete wheat trade liberalization, we find that landowners are the primary losers irrespective of the state of nature realized. The urban sector gains. There is also evidence that livestock capital mitigates the negative impacts of liberalization in the event of drought, especially for small farmers.