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Environmental Drivers of Agricultural Productivity Growth: CO₂ Fertilization of US Field Crops

Charles Taylor and Wolfram Schlenker

No 29320, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Post-war growth in agricultural productivity outpaced the US non-farm economy, spurred by steadily increasing crop yields. We argue that rising atmospheric CO₂ is responsible for a significant share of these yield gains. We present a novel methodology to estimate the CO₂ fertilization effect using data from NASA's Orbiting Carbon Observatory-2 (OCO-2) satellite. Our study complements the many field experiments by regressing county yields on local CO₂ levels across the majority of US cropland under actual growing conditions. For identification, we utilize year-to-year anomalies from county-specific trends, an instrument for those CO₂ anomalies using wind patterns, and a spatial first-differences approach. We consistently find a large CO₂ fertilization effect: a 1 ppm increase in CO₂ equates to a 0.4%, 0.6%, 1% yield increase for corn, soybeans, and wheat, respectively. In a thought exercise, we apply the CO₂ fertilization effect we estimated in our sample from 2015-2021 backwards to 1940, and, assuming no other limiting factors, find that CO₂ was the dominant driver of yield growth—with implications for estimates of future climate change damages.

JEL-codes: N52 Q11 Q54 (search for similar items in EconPapers)
Date: 2021-10
New Economics Papers: this item is included in nep-agr, nep-eff and nep-env
Note: EEE
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