The Dynamic Effects of Weather Shocks on Agricultural Production

Our paper titled The Dynamic Effects of Weather Shocks on Agricultural Production, co-authored with Cédric Crofils and Gauthier Vermandel, has been accepted for publication in the Journal of Environmental Economics and Management.

The working paper is available here: Working paper (authors’ version)

Abstract

This paper proposes a new methodological approach using high-frequency data and local projections to assess the impact of weather on agricultural production. Local projections capture both immediate and delayed effects across crop types and growth stages, while providing early warnings for food shortages. Adverse weather shocks, such as excess heat or rain, consistently lead to delayed downturns in production, with heterogeneous effects across time, crops, and seasons. We build a new index of aggregate weather shocks that accounts for the typical delay between event occurrence and economic recognition, finding that these shocks are recessionary at the macroeconomic level, reducing inflation, production, exports and exchange rates.

A replication ebook is available on Github: codes (ebook)

The corresponding R codes are also available on Github: GitHub

Figure 1 shows the impulse response functions of monthly agricultural production of four main crops in Peru to a standard weather shock— —deviation of average monthly max temperature from historical mean, and deviation of monthly total rainfall from historical mean—for a fourteen-month horizon.

Figure 1: Agricultural Production Response to a Weather Shock.