Distributional heterogeneity in climate change impacts and adaptation: Evidence from Indian agriculture

This study estimates the distributional heterogeneity in the effects of climate change on yields of three major cereal crops: rice, maize, and wheat in India using district-level information for the period 1966-2015. We distinguish between the effects of changes in growing season weather from those due to changes in long-term climate trends and the heterogeneity in these effects across the distribution of crop yields by estimating naïve and climate penalty inclusive models using fixed-effect quantile panel models. We observe an absence of adaptation against rising temperatures for rice and wheat. However, we find a statistically significant presence of adaptation for wheat and maize for changes in precipitation, though the magnitude is small. Moreover, we find that the effects are asymmetric, and are larger at the lower tail of productivity distribution and smaller at the upper tail of the distribution. A 1 C increase in temperature lowers rice and wheat productivity by 23% and 9%, respectively at the first quantile, but the damage is only 6% and 5% at the ninth quantile. Heterogeneity in impacts and adaptation estimates over the yield distribution curve and across crops suggests the importance of customizing strategies for adaptation to changing weather and climate conditions across regions, crops, and current productivity levels. JEL Codes: Q54, C23, Q16