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Potential Benefits from Innovations to Reduce Heat and Water Stress in Agriculture

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  • Nathan P. Hendricks

Abstract

A key challenge in determining the optimal research and development (R&D) investment portfolio for adapting to climate change in agriculture is to understand the potential benefits from reducing alternative sources of climate damages. Existing econometric studies are not able to separately identify the impacts of heat and water stress because higher temperatures cause damages through both mechanisms. To resolve the identification problem, I introduce measures of water deficit and water surplus into a regression analysis that estimates the nonlinear impacts of heat and water stress on nonirrigated rental rates in the central United States. The results indicate rental rate losses of 33% ($9.5 billion annually) by mid-century due to climate change in scenario RCP 4.5. I find that 65% of the projected damages are due to heat stress, 32% due to increasing water deficit, and 3% due to increasing water surplus. However, the source of damages varies spatially.

Suggested Citation

  • Nathan P. Hendricks, 2018. "Potential Benefits from Innovations to Reduce Heat and Water Stress in Agriculture," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 5(3), pages 545-576.
    • Handle: RePEc:ucp:jaerec:doi:10.1086/697305
    DOI: 10.1086/697305
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    Cited by:

    1. Jarrett, Uchechukwu & Miller, Steve & Mohtadi, Hamid, 2023. "Dry spells and global crop production: A multi-stressor and multi-timescale analysis," Ecological Economics, Elsevier, vol. 203(C).
    2. Ariel Ortiz-Bobea, 2021. "Climate, Agriculture and Food," Papers 2105.12044, arXiv.org.
    3. Stefano Carattini & Marcella Veronesi, 2020. "Trust, Temperature Fluctuations, and Asylum Applications," Working Papers 17/2020, University of Verona, Department of Economics.
    4. Ji, Xinde & Cobourn, Kelly M. & Weng, Weizhe, 2018. "The Effect of Climate Change on Irrigated Agriculture: Water-Temperature Interactions and Adaptation in the Western U.S," 2018 Annual Meeting, August 5-7, Washington, D.C. 274306, Agricultural and Applied Economics Association.
    5. Browne, Oliver R. & Ji, Xinde James, 2023. "The Economic Value of Clarifying Property Rights: Evidence from Water in Idaho’s Snake River Basin," Journal of Environmental Economics and Management, Elsevier, vol. 119(C).
    6. Xinde Ji & Kelly M. Cobourn, 2021. "Weather Fluctuations, Expectation Formation, and Short-Run Behavioral Responses to Climate Change," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 78(1), pages 77-119, January.
    7. Lee, Juhee & Hendricks, Nathan P., 2022. "Crop Choice Decisions in Response to Soil Salinization on Irrigated Land in California," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322602, Agricultural and Applied Economics Association.
    8. Emanuele Massetti & Robert Mendelsohn, 2020. "Temperature thresholds and the effect of warming on American farmland value," Climatic Change, Springer, vol. 161(4), pages 601-615, August.
    9. Perez-Quesada, Gabriela & Hendricks, Nathan P. & Steward, David R., 2020. "Quantifying the economic costs of High Plains Aquifer depletion," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304225, Agricultural and Applied Economics Association.
    10. Sampson, Gabriel S. & Al-Sudani, Amer & Bergtold, Jason, 2021. "Local irrigation response to ethanol expansion in the High Plains Aquifer," Resource and Energy Economics, Elsevier, vol. 66(C).
    11. Surender Kumar & Madhu Khanna, 2023. "Distributional heterogeneity in climate change impacts and adaptation: Evidence from Indian agriculture," Agricultural Economics, International Association of Agricultural Economists, vol. 54(2), pages 147-160, March.
    12. Bigelow, Daniel P. & Zhang, Hongliang, 2018. "Supplemental irrigation water rights and climate change adaptation," Ecological Economics, Elsevier, vol. 154(C), pages 156-167.
    13. DePaula, Guilherme, 2020. "The distributional effect of climate change on agriculture: Evidence from a Ricardian quantile analysis of Brazilian census data," Journal of Environmental Economics and Management, Elsevier, vol. 104(C).
    14. Yu, Chengzheng & Miao, Ruiqing & Khanna, Madhu, 2021. "Maladaptation of U.S. Corn and Soybean to a Changing Climate," 2021 Conference, August 17-31, 2021, Virtual 313798, International Association of Agricultural Economists.
    15. Surender Kumar & Madhu Khanna, 2023. "Distributional heterogeneity in climate change impacts and adaptation: Evidence from Indian agriculture," Working papers 332, Centre for Development Economics, Delhi School of Economics.
    16. Ariel Ortiz‐Bobea, 2020. "The Role of Nonfarm Influences in Ricardian Estimates of Climate Change Impacts on US Agriculture," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(3), pages 934-959, May.
    17. Lee, Juhee & Hendricks, Nathan, 2022. "Irrigation Decisions in Response to Groundwater Salinity in Kansas," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 47(3), September.
    18. Seungki Lee & Yongjie Ji & GianCarlo Moschini, 2021. "Agricultural Innovation and Adaptation to Climate Change: Insights from Genetically Engineered Maize," Center for Agricultural and Rural Development (CARD) Publications 21-wp616, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    19. Yu, Chengzheng & Miao, Ruiqing & Khanna, Madhu, 2021. "Maladaptation of U.S. Corn and Soybean Yields to a Changing Climate," 2021 Conference, August 17-31, 2021, Virtual 315037, International Association of Agricultural Economists.

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