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All Journal Indonesian Journal of Agriculture and Environmental Analytics
Khoiryah, Eva Zunia
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Agriculture, Biological Sciences & Forestry Earth & Planetary Sciences Environmental Science Health Professions Physics

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Economic Impact Analysis of Climate Change on Sugarcane Production: An ARDL Model Approach Fernanda, Dandi; Khoiryah, Eva Zunia; Wulandari, Ririn; Wasil, Mohammad
Indonesian Journal of Agriculture and Environmental Analytics Vol. 5 No. 1 (2026): January 2026
Publisher : PT FORMOSA CENDEKIA GLOBAL

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.55927/ijaea.v5i1.15972

Abstract

Global climate volatility has created structural uncertainties threatening the supply stability of strategic commodities. This study aims to estimate the dynamic supply response of sugarcane in East Java to agro-climatic shocks and conventional production inputs over the 1995–2023 period. Using the Autoregressive Distributed Lag (ARDL) approach, this study models the market adjustment mechanism toward long-run equilibrium. Estimation results reveal that the sugarcane sector faces serious supply rigidity due to hydrological factors. Rainfall anomalies are identified as persistent negative supply shocks, triggering technical inefficiency due to waterlogging risks. On the other hand, the land area variable shows positive but inelastic elasticity, confirming the law of diminishing marginal returns on an aggregate scale. The finding that temperature and population variables are insignificant revises old theoretical assumptions, confirming that the sugarcane production function in tropical regions is more sensitive to hydrological constraints than thermal ones. The economic implication is that self-sufficiency strategies can no longer rely on high opportunity cost land extensification, but require investment reallocation towards climate risk mitigation technologies to improve supply curve efficiency.
Co-Authors Fernanda, Dandi Ririn Wulandari Wasil, Mohammad