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Weather Volatility and Production Efficiency

Author

Listed:
  • Denitsa Angelova

    (School of Management, Technical University of Munich, Arcisstraße 21, 80333 Munich, Germany)

  • Jan Käbel

    (School of Life Sciences Weihenstephan, Technical University of Munich, Alte Akademie 8, 85354 Freising, Germany)

Abstract

We formulate a stochastic production frontier model to estimate the production efficiency scores while correcting for technical progress and weather effects in the form of temperature and precipitation levels and volatility. We econometrically estimate a model for European agriculture. Our results indicate that average temperature, unlike average precipitation levels, significantly influences aggregate agricultural output. We estimate that a marginal increase in temperature would decrease aggregate European agricultural output by about 1.6% percent. Further estimation results indicate a slight increase in output associated with marginal increases of precipitation and temperature volatilities.

Suggested Citation

  • Denitsa Angelova & Jan Käbel, 2019. "Weather Volatility and Production Efficiency," Sustainability, MDPI, vol. 11(24), pages 1-12, December.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:24:p:6970-:d:295010
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    References listed on IDEAS

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