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Climate Change and Agriculture Reconsidered

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  • Fisher, Anthony

Abstract

Despite the existence of a large and growing literature on the potential impact of climatechange on agriculture, there still exists some disagreement about the magnitude and even thesign. Our own research suggests that the impact on U.S. agriculture is likely to be stronglynegative, based on a series of studies in which we link farmland values to climate variables,and crop yields to both climate and yearly weather variables. Results are significant, robust,and consistent across data sets and methods. A recent but influential study by Deschˆenes andGreenstone (2007b) reports dramatically different results: based on regressions of agriculturalprofits and yields on weather variables, they conclude that the impact of climate change willbe either insignificant or positive. In this paper we reconcile these conflicting results.Likely explanations for the divergence between our findings and theirs are: (1) missingand almost certainly incorrect weather and climate data in their study, amplified by theuse of state-by-year fixed effects that absorb most year-to-year weather variation but leavedata errors intact; (2) their unusual and in our judgment incorrect treatment of climatechangepredictions; (3) their use of the older Hadley II climate model for climate changepredictions rather than the more recent and less optimistic Hadley III climate model usedin the Fourth IPCC Report and in our studies; and (4) theoretical difficulties in their profitbasedapproach due to the confounding effects of storage and possibly also capital andinventory adjustments and local price movements associated with weather fluctuations. Acareful account of these factors shows that the balance of evidence weighs heavily on theside of severe adverse potential impacts on U.S. agriculture by the end of the century, andprobably sooner, stemming from anticipated global warming.

Suggested Citation

  • Fisher, Anthony, 2009. "Climate Change and Agriculture Reconsidered," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt33v2d7vc, Department of Agricultural & Resource Economics, UC Berkeley.
  • Handle: RePEc:cdl:agrebk:qt33v2d7vc
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    1. Angus Deaton & Guy Laroque, 1992. "On the Behaviour of Commodity Prices," Review of Economic Studies, Oxford University Press, vol. 59(1), pages 1-23.
    2. Kelly, David L. & Kolstad, Charles D. & Mitchell, Glenn T., 2005. "Adjustment costs from environmental change," Journal of Environmental Economics and Management, Elsevier, vol. 50(3), pages 468-495, November.
    3. Cline, William R, 1996. "The Impact of Global Warming on Agriculture: Comment," American Economic Review, American Economic Association, vol. 86(5), pages 1309-1311, December.
    4. Brennan, Donna & Williams, Jeffrey & Wright, Brian D, 1997. "Convenience Yield without the Convenience: A Spatial-Temporal Interpretation of Storage under Backwardation," Economic Journal, Royal Economic Society, vol. 107(443), pages 1009-1022, July.
    5. Williams,Jeffrey C. & Wright,Brian D., 2005. "Storage and Commodity Markets," Cambridge Books, Cambridge University Press, number 9780521023399, August.
    6. Mendelsohn, Robert & Nordhaus, William D & Shaw, Daigee, 1994. "The Impact of Global Warming on Agriculture: A Ricardian Analysis," American Economic Review, American Economic Association, vol. 84(4), pages 753-771, September.
    7. Conley, T. G., 1999. "GMM estimation with cross sectional dependence," Journal of Econometrics, Elsevier, vol. 92(1), pages 1-45, September.
    8. Wolfram Schlenker & Michael J. Roberts, 2008. "Estimating the Impact of Climate Change on Crop Yields: The Importance of Nonlinear Temperature Effects," NBER Working Papers 13799, National Bureau of Economic Research, Inc.
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    Cited by:

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    2. Arellano Gonzalez, Jesus, 2018. "Estimating climate change damages in data scarce and non-competitive settings: a novel version of the Ricardian approach with an application to Mexico," 2018 Annual Meeting, August 5-7, Washington, D.C. 274010, Agricultural and Applied Economics Association.
    3. Cunha, Denis Antonio da & Coelho, Alexandre Braganca & Feres, Jose & Braga, Marcelo Jose, 2012. "Impacts of climate change on Brazilian agriculture: an analysis of irrigation as an adaptation strategy," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126223, International Association of Agricultural Economists.

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