An essay on the impact of climate change on US agriculture: weather fluctuations, climatic shifts, and adaptation strategies

The impact of climate change on US agriculture has been debated for more than two decades, but the estimates ranged from no damage at the lower end to 80 % losses of grain yields at the higher end. This essay aims to help understand such divergent predictions by clarifying the concepts of weather and climate. First, the widely-read panel fixed effects models capture only the impacts of weather fluctuations but not of climate normals. Random weather fluctuations and climatic shifts are two different meteorological events and they have distinct implications on farming decisions. The former is perceived as random while the latter is perceived as non-random by the farmers. Using the historical corn yield data in the US, I explain the differences between the impact of random weather and that of climate change. Second, adaptation strategies to climatic changes and increased climate risks cannot be accounted for by the panel fixed effects models. Using the farm household data collected in sub-Saharan Africa and Latin America, I discuss quantitative significance of modeling adaptation strategies in the estimates of climate damage. Distinction between random weather fluctuations and climatic shifts is critical in modeling farming decisions, as they are fundamental to climate science, but is poorly understood by the impact researchers. Copyright Springer Science+Business Media Dordrecht 2013