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The Effect of the El Nino Southern Oscillation on U.S. Corn Production and Downside Risk

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  • Tack, Jesse B.
  • Ubilava, David

Abstract

El Nino Southern Oscillation (ENSO) teleconnections imply anomalous weather conditions around the globe, causing yield shortages, price changes, and even civil unrests. Extreme ENSO events may cause catastrophic damages to crop yields, thus amplifying downside risk for producers. This study presents a framework for quantifying the effects of climate on crop yield distributions. An empirical application provides estimates of the effect that ENSO events have on the means of U.S. county-level corn yield distributions, as well as the probabilities of catastrophic crop loss. Our findings demonstrate that ENSO events strongly influence these probabilities systematically over large production regions, which has important implications for research and policy analysis in the production, risk management, climate change, and civil unrest literatures.

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Bibliographic Info

Paper provided by Southern Agricultural Economics Association in its series 2012 Annual Meeting, February 4-7, 2012, Birmingham, Alabama with number 119785.

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Date of creation: 2012
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Handle: RePEc:ags:saea12:119785

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Related research

Keywords: Climate; El Nino Southern Oscillation; Maximum Entropy; Risk Management; Yield Distribution; Crop Production/Industries; Environmental Economics and Policy; Production Economics;

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References

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  1. Allan D. Brunner, 1998. "El Nino and world primary commodity prices: warm water or hot air?," International Finance Discussion Papers 608, Board of Governors of the Federal Reserve System (U.S.).
  2. Ubilava, David & Holt, Matthew T., 2009. "Nonlinearities in the World Vegetable Oil Price System: El Nino Effects," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49360, Agricultural and Applied Economics Association.
  3. Octavio A. Ramirez & Sukant Misra & James Field, 2003. "Crop-Yield Distributions Revisited," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(1), pages 108-120.
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  5. Martin Wittenberg, 2010. "An introduction to maximum entropy and minimum cross-entropy estimation using Stata," Stata Journal, StataCorp LP, vol. 10(3), pages 315-330, September.
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  7. Moschini, Giancarlo & Hennessy, David A., 2001. "Uncertainty, risk aversion, and risk management for agricultural producers," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 2, pages 88-153 Elsevier.
  8. Hennessy, David A., 2012. "Crop Yield Skewness and the Normal Distribution," Staff General Research Papers 35019, Iowa State University, Department of Economics.
  9. Tack, Jesse B. & Harri, Ardian & Coble, Keith H., 2012. "More than Mean Effects: Modeling the Effect of Climate on the Higher Order Moments of Crop Yields," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 123330, Agricultural and Applied Economics Association.
  10. Dalton, Michael G., 2001. "El Nino, Expectations, and Fishing Effort in Monterey Bay, California," Journal of Environmental Economics and Management, Elsevier, vol. 42(3), pages 336-359, November.
  11. Chavas, Jean-Paul & Holt, Matthew T, 1996. "Economic Behavior under Uncertainty: A Joint Analysis of Risk Preferences and Technology," The Review of Economics and Statistics, MIT Press, vol. 78(2), pages 329-35, May.
  12. Zanini, Fabio C. & Sherrick, Bruce J. & Schnitkey, Gary D. & Irwin, Scott H., 2001. "Crop Insurance Valuation Under Alternative Yield Distributions," 2001 Conference, April 23-24, 2001, St. Louis, Missouri 18953, NCR-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
  13. Kelly, David L. & Kolstad, Charles D. & Mitchell, Glenn T., 2005. "Adjustment costs from environmental change," Journal of Environmental Economics and Management, Elsevier, vol. 50(3), pages 468-495, November.
  14. Hall, Anthony D. & Skalin, Joakim & Teräsvirta, Timo, 1998. "A nonlinear time series model of El Niño," Working Paper Series in Economics and Finance 263, Stockholm School of Economics.
  15. john M. Antle, 2010. "Asymmetry, Partial Moments, and Production Risk," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(5), pages 1294-1309.
  16. Bellemare, Marc F., 2011. "Rising food prices, food price volatility, and political unrest," MPRA Paper 31888, University Library of Munich, Germany.
  17. Alan P. Ker & Keith Coble, 2003. "Modeling Conditional Yield Densities," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(2), pages 291-304.
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Cited by:
  1. Tack, Jesse B. & Ubilava, David, 2013. "El Ni˜no Southern Oscillation Impacts on Crop Insurance," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 151429, Agricultural and Applied Economics Association.

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