How econometrics can help us understand the effects of climate change on crop yields: the case of soybeans

Abstract

Climate econometrics is a new field, which is proving to be a fruitful approach to give a rigorous treatment to many hypotheses related to climate change. This chapter illustrates how econometrics can help understand the effects of climate change on the time behavior of crop yields at a country-level scale. We use a multivariate framework to discuss issues related to non-stationarity of climate variables, the existence of nonlinearities, and collinearities. We also examine the exogeneity of the explanatory variables in crop yields models, the presence of extreme events, and the short and long-run effects of climate change. Global climate change may affect the incorporation of new lands to production, and the rise of crop yields to meet the increasing demand for food and energy. However, adaptation, trade, the declining share over time of agriculture in the economy and carbon fertilization have reduced the harmful impacts of global warming. In particular, carbon fertilizationrefers to the positive effects that increasing carbon dioxide concentrations have on some plants that use CO2 during photosynthesis. We focus on soybeans in Brazil, United States, and particularly in Argentina, as interesting examples of mitigation and adaptation to global and regional climate fluctuations.