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The Predictive Content of Climate Anomalies for Agricultural Production: Does ENSO Really Matter?

Listed author(s):
  • Ubilava, David
  • Orlowski, Jan

While the production effect of El Niño and its counterpart – La Niña – is well documented, many of the previous studies apply binary variables (e.g., for El Niño and La Niña events) to analyze the relationship, and, moreover, much of their conclusions rely on in-sample fit and test statistics. In this study, we extend previous literature by examining the effect of El Niño Southern Oscillation (ENSO) on U.S. corn production in an out-of-sample setting. In so doing, we incorporate weather variables, such as degree days and precipitation in the analysis, to investigate the trade-off between model uncertainty and parameter uncertainty. We find that ENSO likely impacts U.S. corn production though extreme degree days. This is particularly true for Counties in the southern Corn Belt as well as corn-growing Counties in the Appalachian and Southeastern regions. In many instances, however, more accurate forecasts are obtained when the ENSO effect on corn yields is modeled directly.

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File URL: http://purl.umn.edu/236281
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Paper provided by Agricultural and Applied Economics Association in its series 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts with number 236281.

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Date of creation: 2016
Handle: RePEc:ags:aaea16:236281
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  1. Woli, Prem & Paz, Joel O. & Hoogenboom, Gerrit & Garcia y Garcia, Axel & Fraisse, Clyde W., 2013. "The ENSO effect on peanut yield as influenced by planting date and soil type," Agricultural Systems, Elsevier, vol. 121(C), pages 1-8.
  2. Allan D. Brunner, 2002. "El Niño and World Primary Commodity Prices: Warm Water or Hot Air?," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 176-183, February.
  3. Farid AitSahlia & Chung-Jui Wang & Victor Cabrera & Stan Uryasev & Clyde Fraisse, 2011. "Optimal crop planting schedules and financial hedging strategies under ENSO-based climate forecasts," Annals of Operations Research, Springer, vol. 190(1), pages 201-220, October.
  4. Jesse B. Tack & David Ubilava, 2015. "Climate and agricultural risk: measuring the effect of ENSO on U.S. crop insurance," Agricultural Economics, International Association of Agricultural Economists, vol. 46(2), pages 245-257, March.
  5. Ubilava, David & holt, Matt, 2013. "El Ni~no southern oscillation and its effects on world vegetable oil prices: assessing asymmetries using smooth transition models," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 57(2), June.
  6. Chen, Chi-Chung & McCarl, Bruce A., 2000. "The Value Of Enso Information To Agriculture: Consideration Of Event Strength And Trade," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 25(02), December.
  7. Jesse Tack & David Ubilava, 2013. "The effect of El Niño Southern Oscillation on U.S. corn production and downside risk," Climatic Change, Springer, vol. 121(4), pages 689-700, December.
  8. Podesta, Guillermo & Letson, David & Messina, Carlos & Royce, Fred & Ferreyra, R. Andres & Jones, James & Hansen, James & Llovet, Ignacio & Grondona, Martin & O'Brien, James J., 2002. "Use of ENSO-related climate information in agricultural decision making in Argentina: a pilot experience," Agricultural Systems, Elsevier, vol. 74(3), pages 371-392, December.
  9. Christopher B. Barrett, 1998. "The Value of Imperfect ENSO Forecast Information: Discussion," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(5), pages 1109-1112.
  10. Michael J. Roberts & Wolfram Schlenker, 2013. "Identifying Supply and Demand Elasticities of Agricultural Commodities: Implications for the US Ethanol Mandate," American Economic Review, American Economic Association, vol. 103(6), pages 2265-2295, October.
  11. Anthony C. Fisher & W. Michael Hanemann & Michael J. Roberts & Wolfram Schlenker, 2012. "The Economic Impacts of Climate Change: Evidence from Agricultural Output and Random Fluctuations in Weather: Comment," American Economic Review, American Economic Association, vol. 102(7), pages 3749-3760, December.
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