Irrigation, Adaptation and Climate Change: Panel Data Evidence for Maize in Mexico

In this paper, I use an 18-year long panel data set of maize yields and high resolution weather data at the municipality level in Mexico to shed light on the differentiated effects that climate change may have in rainfed and irrigated agriculture. I find that rainfed maize is sensitive to both temperature and precipitation. This sensitivity is weakened in irrigated maize suggesting that the use of irrigation reduces not only the dependency of production on direct precipitation but also the damaging effects of warmer temperatures. When the panel estimates are applied to climate change projections for 2100 I conclude that, in the absence of adaptation, rainfed maize yields could decrease by 3.3-4.0% on average depending on the climate model and scenario with rising temperatures accounting for about 80% of the loss and a declining precipitation accounting for the remaining 20%. Areas with high levels of rural poverty could be among the most affected with some municipalities losing up to 13.5% of maize yields.