Three Essays on the Economic Relationships Between Climate and Agriculture

Abstract

Climate plays an influential part in decision making by farmers by influencing the need and effectiveness of some inputs such as pesticides as well as expected yields. We look at the effect of climate variables and GMO incidence on pesticide expenditures for the subcategories of herbicides, fungicides, and insecticides and find that pesticide usage is affected by changes in the climate with differing effects by crop and pesticide type. Additionally, we find evidence that increased incidence of GMO crops decreases pesticide expenditures. This study adds to the literature by analyzing climate and GMO effects by pesticide subcategories and considering fungicides, herbicides and insecticides.

Longer term ocean related decadal climate variability (DCV) also has the potential to influence climate plus crop yields. Forecasts of DCV events can provide farmers with altered expectations of crop yields plus the opportunity to alter their crop mixes and input usage to account for the expected effects on yields. We look at the yield effect of the negative and positive phases of DCV phenomena covering the Pacific Decadal Oscillation (PDO), the Tropical Atlantic Gradient (TAG), and the West Pacific Warm Pool (WPWP). We find that phase combinations across these phenomena have significant associations with climate outcomes and in turn, indirect effects on yields. In turn, this is work is used to investigate the value of DCV information and the nature of adaptations. We found initial estimates suggesting that both the use of forecasts that permit a conditional probability of future phase combinations occurring and perfect information on next year’s DCV phase can significantly increase agriculture consumer and producer welfare. This is a new result that is an estimate of the US national value of releasing DCV forecasts and accompanying yield information.