Abstract
This study examines the impact of temperature and rainfall variations on land value in Bangladesh, a country highly vulnerable to climate change. Given Bangladesh's context of extreme land scarcity and intense competition for land between agricultural and non-agricultural uses, the study estimates the effects separately for farmland and non-farmland values. The study links the location of each household in a nationally representative panel dataset to the nearest ground weather station, providing corresponding temperature and rainfall information. The land values used are self-reported by households, representing the best available panel of land value data in Bangladesh. The variations in growing season heat accumulation and total rainfall for rice, the primary crop, have been used to assess the effect on farmland value. The study utilizes standardized z-scores of temperatures and rainfall for non-farmland value based on historical distributions from the relevant weather station. Using panel fixed effect models, the study finds that temperatures detrimental to crop growth negatively affect farmland value. Specifically, one additional degree day of heat stress reduces farmland value by USD 76 or 0.3 percent of the average farmland value. Non-farmland value is negatively impacted by the minimum temperature and rainfall z-scores. The study identifies the lack of access to banking facilities and household landholding as potential mechanisms underlying these effects.