Impact of Random Annual Variation in Precipitation and Temperature on Agricultural Profits

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Evaluating Written Work
The Economic Impacts of Climate Change: Evidence from Agricultural Output and Random Fluctuations in Weather evaluates the effect of climate change on America’s agricultural land. The paper by Deschenes and Greenstone estimates the impact of the probability of random annual variation in precipitation and temperature on agricultural profits. It implements the hedonic approach from the previous literature. This paper finds this technique quite unreliable as it provides estimates of the impact of climate change that are sensitive to influencing minor decisions regarding the appropriate control of sample, variables, and weighting.
After a series of studies, Deschenes and Greenstone oppose the view that climate change can impact agriculture in the US. They argue that there was an insignificant relationship between weather and crop output per year. As such, if short-run weather changes did not affect agricultural yields or profit, then climate changes are likely to have no impact in the long run. Using the predictions from the Hadley 2 Model, the authors conclude that climate change will result in a $1.3 billion or 4.0% rise in annual agricultural profits (Deschênes and Greenstone).
The agricultural sector is vital to the economy and is directly linked to climate. As such, it is widely used in research intended to anticipate the economic impact of climate change. However, different people tend to differ on both the sign and magnitude of potential effects. In this paper, the authors criticize the hedonic model and p...