The Dynamic Effects of Weather Shocks on Agricultural Production

Cédric Crofils (), Ewen Gallic () and Gauthier Vermandel
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Cédric Crofils: AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique, LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique
Ewen Gallic: AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique
Gauthier Vermandel: LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique, CMAP - Centre de Mathématiques Appliquées de l'Ecole polytechnique - Inria - Institut National de Recherche en Informatique et en Automatique - X - École polytechnique - IP Paris - Institut Polytechnique de Paris - CNRS - Centre National de la Recherche Scientifique, Banque de France - Banque de France - Banque de France

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Abstract: This paper investigates the dynamic effects of weather shocks on monthly agricultural production in Peru, using a Local Projection framework. An adverse weather shock, measured by an excess of heat or rain, always generates a delayed negative downturn in agricultural production. The magnitude and duration of this downturn depend on several factors, including the type of crop and the timing of the shock. On average, a weather shock—a temperature shock—can cause a monthly decline of 5% to 15% in agricultural production. The response exhibit important heterogeneity across time, crop, and season dimensions, with hysteresis suggesting farmers' adaptation over time. At the macroeconomic level, weather shocks are recessionary and entail a decline in inflation, agricultural production, exports, exchange rate and GDP.

Keywords: Weather shocks; Agriculture; Local projections; VAR (search for similar items in EconPapers)
Date: 2024-02-02
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-04443037v4
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Published in Journal of Environmental Economics and Management, 2024, 130, pp.103078. ⟨10.1016/j.jeem.2024.103078⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-04443037

DOI: 10.1016/j.jeem.2024.103078

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