How econometrics can help us understand the effects of climate change on crop yields: the case of soybeans

Climate econometrics is a new field which is providing a fruitful approach to give a rigorous basis for many hypotheses related to climate change. With this aim, this chapter illustrates how econometrics can help understand the effects of climate change on the time behavior of crop yields at a country-level scale. We discuss different issues which empirical studies should address such as the non-stationarity nature of climate variables, the exogeneity of the variables used for modelling crop yields, the existence of non-linearities, the presence of extreme events, disentangling short and dealing with long-run effects of climate change, and collinearities in a multivariate framework. The incorporation of new lands to production or the rise of crop yields on existing lands to meet increasing demand for food and energy may be threatened by global climate change. However, there are several factors that have reduced the harmful impacts of climate change: adaptation, trade, the declining share over time of agriculture in the economy and carbon fertilization. In particular, the CO2 fertilization eect should be taken into account for certain crops. As an example, we focus on soybeans in the main producer and exporter countries: Brazil and United States, and particularly in Argentina, as an interesting case of mitigation and adaptation processes due to global and local climate changes.