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Estimating the Effects of Weather and Climate Change on Agricultural Productivity

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Abstract

Explaining changes in agricultural productivity involves explaining changes in output and input quantities. Several economic models can be used for this purpose. This paper considers a model that accounts for weather and output price uncertainty. Changes in productivity are then explained in two steps. First, the relationship between observed outputs, observed inputs and observed weather variables is written in the form of a stochastic production frontier model. Following estimation, the model is used to decompose a proper productivity index into measures of technical progress and environmental change, measures of technical efficiency and scale-and-mix efficiency change, and a measure of change in statistical noise. Second, the relationship between observed input prices and quantities, expected output prices and expected weather variables is written in the form of a system of input demand equations. Following estimation, the system is used to further decompose the measure of scale-and-mix efficiency change into measures of technical progress, input price change, changes in expectations, and changes in allocative efficiency and statistical noise. The methodology is applied to U.S. agricultural data. The effects of weather and climate change on agricultural productivity are found to be small relative to the effects of changes in input prices.

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  • C. J. O’Donnell, 2021. "Estimating the Effects of Weather and Climate Change on Agricultural Productivity," CEPA Working Papers Series WP032021, School of Economics, University of Queensland, Australia.
    • Handle: RePEc:qld:uqcepa:157
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    File URL: https://economics.uq.edu.au/files/24870/WP032021.pdf
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