Distributional Effects of Extreme Weather Events on Crop Revenue in the U.S.

• Agricultural Economics Workshop

Date and Location

Thursday, May 6, 2021, 4:10 PM - 5:30 PM
Online Meeting, Zoom

Abstract

As climate change intensifies, extreme weather events are projected to increase in frequency and severity. When these events hit major crop-growing regions (e.g., the US Corn Belt), substantial spatial variation in local yield shocks arises and, importantly, an increase in price due to production shortfalls transmits to broad regions. This combination can lead to regional inequality of crop revenues by widening the gap between the regions hit by such events and those not. I study the distributional impacts of extreme weather events on crop revenues. To this end, I first estimate the impacts of local weather and the national yield shock on crop-specific (per-acre) revenues at the county level. This approach allows me to account for the correlation between the local yield and the post-harvest price. Using this approach, I quantify the distributional effects of the 1988 and 2012 US droughts on corn and soybean revenues across US counties. I find that in 1988 and 2012 the regional inequality of crop revenues is much worse than in normal years.