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Climatic effects and total factor productivity: econometric evidence for Wisconsin dairy farms

Eric Njuki, Boris E Bravo-Ureta and Víctor E Cabrera

European Review of Agricultural Economics, 2020, vol. 47, issue 3, 1276-1301

Abstract: This study exploits temporal and cross-sectional variation in weather and long-run climate trends to investigate their effects on farm-level productivity. Using panel data for a sample of Wisconsin dairy producers, three stochastic production frontier models are estimated and a random parameters approach is chosen as the most desirable, which accounts for stochastic observed and unobserved environmental factors. The estimated coefficients are used to decompose a multiplicative total factor productivity index that accounts for different sources of productivity growth. Annual productivity growth is estimated at 2.16 per cent, driven primarily by technical progress (1.91 per cent per annum). The average per year contribution of the other productivity components is: climate adaptation efforts -0.31 per cent; scale-mix efficiency change +0.13 per cent and technical efficiency +0.05 per cent.

Keywords: dairy farming; climatic effects; stochastic production frontiers; generalised true random effects; random parameters; total factor productivity (search for similar items in EconPapers)
Date: 2020
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European Review of Agricultural Economics is currently edited by Christoph Weiss, Thomas Heckelei and Paolo Sckokai

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Handle: RePEc:oup:erevae:v:47:y:2020:i:3:p:1276-1301.