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Climate Econometrics: Can the Panel Approach Account for Long‐Run Adaptation?

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  • Pierre Mérel
  • Matthew Gammans

Abstract

The panel approach with fixed effects and nonlinear weather effects has become a popular method to uncover weather impacts on economic outcomes, but its ability to capture long‐run climatic adaptation remains unclear. Building upon a framework proposed by McIntosh and Schlenker (2006), this paper identifies empirical conditions under which the nonlinear panel approach can approximate a long‐run response to climate. When these conditions fail, the obtained relationship may still be interpretable as a weighted average of underlying short‐run and long‐run responses. We use this decomposition to revisit recently published climate impact estimates. For spatially large panels, the estimated temperature–outcome relationship mostly reflects the long‐run climatic response; this is not so for precipitation. We find some evidence of long‐run climatic adaptation for crop yield outcomes in the United States and France.

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  • Pierre Mérel & Matthew Gammans, 2021. "Climate Econometrics: Can the Panel Approach Account for Long‐Run Adaptation?," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(4), pages 1207-1238, August.
  • Handle: RePEc:wly:ajagec:v:103:y:2021:i:4:p:1207-1238
    DOI: 10.1111/ajae.12200
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    3. Ariel Ortiz-Bobea, 2021. "Climate, Agriculture and Food," Papers 2105.12044, arXiv.org.
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    9. Yabin Da & Yangyang Xu & Bruce McCarl, 2022. "Effects of Surface Ozone and Climate on Historical (1980–2015) Crop Yields in the United States: Implication for Mid-21st Century Projection," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 81(2), pages 355-378, February.
    10. Fang, Ming & Jin, Songqing & Deininger, Klaus W., 2022. "Climate, land productivity and agricultural adaptation in Ukraine," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322437, Agricultural and Applied Economics Association.
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    14. Theodoros Chatzivasileiadis & Ignasi Cortes Arbues & Jochen Hinkel & Daniel Lincke & Richard S. J. Tol, 2023. "Actualised and future changes in regional economic growth through sea level rise," Papers 2401.00535, arXiv.org.
    15. Feriga, Moustafa & Lozano Gracia, Nancy & Serneels, Pieter, 2024. "The Impact of Climate Change on Work Lessons for Developing Countries," IZA Discussion Papers 16914, Institute of Labor Economics (IZA).
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    17. Chen, Xiaoguang & Cui, Xiaomeng & Gao, Jing, 2023. "Differentiated Agricultural Sensitivity and Adaptability to Rising Temperatures across Regions and Sectors in China," 2023 Annual Meeting, July 23-25, Washington D.C. 335522, Agricultural and Applied Economics Association.
    18. Rudik, Ivan & Lyn, Gary & Tan, Weiliang & Ortiz-Bobea, Ariel, 2022. "The Economic Effects of Climate Change in Dynamic Spatial Equilibrium," Conference papers 333486, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    19. Curzi, Daniele & Nota, Paolo & Di Falco, Salvatore, 2022. "Post-Harvest Losses and Climate Conditions in Sub-Saharan Africa," 96th Annual Conference, April 4-6, 2022, K U Leuven, Belgium 321219, Agricultural Economics Society - AES.
    20. Tao Xiang & Tariq H. Malik & Jack W. Hou & Jiliang Ma, 2022. "The Impact of Climate Change on Agricultural Total Factor Productivity: A Cross-Country Panel Data Analysis, 1961–2013," Agriculture, MDPI, vol. 12(12), pages 1-20, December.
    21. Surender Kumar & Madhu Khanna, 2023. "Distributional heterogeneity in climate change impacts and adaptation: Evidence from Indian agriculture," Working papers 332, Centre for Development Economics, Delhi School of Economics.
    22. Cheng, Muxi & McCarl, Bruce A. & Fei, Chengcheng, 2022. "Impact of Climate Change on the U.S. Livestock Sector," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322255, Agricultural and Applied Economics Association.
    23. Olper, Alessandro & Maugeri, Maurizio & Manara, Veronica & Raimondi, Valentina, 2021. "Weather, climate and economic outcomes: Evidence from Italy," Ecological Economics, Elsevier, vol. 189(C).
    24. Cheng, Muxi & McCarl, Bruce A. & Fei, Chengcheng, 2021. "Climate Change Effects on the U.S. Hog production," 2021 Annual Meeting, August 1-3, Austin, Texas 313966, Agricultural and Applied Economics Association.
    25. Potter, Nicholas & Hrozencik, Robert A., 2023. "Accounting for Non-Local Climate in Estimating Climate Impacts on Agriculture," 2023 Annual Meeting, July 23-25, Washington D.C. 335654, Agricultural and Applied Economics Association.

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