Abstract
This paper provides a critical assessment of the literature estimating the consequences of climate impacts in agriculture and the food system. This literature focuses overwhelmingly on the impact of elevated CO2 concentrations in the atmosphere, higher temperatures and changing precipitation on staple crop yields. While critically important for food security, we argue that researchers have gravitated to measuring impacts ‘under the streetlight’ where data and models are plentiful. We argue that prior work has largely neglected the vast majority of potential economic impacts of climate change on agriculture. A broader view must extend the impacts analysis to inputs beyond land, including the consequences of climate change for labor productivity, as well as for purchased intermediate inputs. Largely overlooked is the impact of climate change on the rate of total factor productivity growth and the potential for more rapid depreciation of the underlying knowledge capital underpinning this key driver of agricultural output growth. This broader view must also focus more attention on non-staple crops, which, while less important from a caloric point of view, are critically important in redressing current micronutrient deficiencies in many diets around the world. The paper closes with numerical simulations that demonstrate the extent to which limited input and output coverage of climate impacts can lead to considerable underestimation of the consequences for food security and economic welfare. Of particular significance is the finding that humans in the humid tropics are likely more vulnerable to heat stress than are many of the well-adapted crops, such as rice. By omitting the impact of heat stress on humans, most studies of climate impacts greatly understate the welfare losses in the world’s poorest economies.
Generated Summary
This viewpoint paper critically assesses the existing literature on the agricultural impacts of climate change, with a focus on the limitations of current research and the need for a broader scope. The study employs an analytical framework that incorporates an aggregate agricultural production function to evaluate the relative importance of different factors driving food production, including total factor productivity (TFP) and various inputs. The methodology involves examining the economic impacts of climate change on agriculture through a general equilibrium model, and also highlights the importance of considering the impacts on non-staple crops and livestock production, which are often overlooked in climate impact assessments. The paper utilizes computational simulations to illustrate the potential consequences of underestimating climate impacts, especially in the world’s poorest economies. The main approach of the paper is to highlight the ‘streetlight effect’ in climate impact research, where readily available data and methods lead researchers to focus on easily quantifiable impacts while neglecting potentially larger and more significant impacts.
Key Findings & Statistics
- The vast majority of climate impact analyses have focused on staple crops: maize, rice, soybeans, and wheat.
- Staple grains and oilseeds account for only about one-quarter of global agricultural output, measured in value terms.
- The coverage of climate impacts on crops providing critical micro-nutrients is relatively weak.
- In 2019, the USDA/ERS compiled data that highlighted a critical dimension of food production, which is total factor productivity (TFP) growth.
- In the US, value-added (land, labor, and capital) accounts for only 40% of input costs, whereas in the Sub-Saharan African region, this share is more than 80%. Within the value-added composite, labor is dominant in the SSA region, followed by capital and land.
- In the US, capital and labor exhibit comparable cost shares.
- The modest economic importance of the land input will be somewhat surprising to those who are used to thinking of agricultural production as being largely driven by land area.
- The global average of labor capacity drops to 59% with a +4 degrees C increase, with labor capacity in the tropics falling to 40%.
- Even in the US, where agriculture is highly mechanized particularly for row crops, the impact on workers cultivating and harvesting specialty crops has been shown to be significant.
- In the US, value-added (land, labor, and capital) accounts for only 40% of input costs, whereas in the SSA region, this share is more than 80%. Within the value-added composite, labor is dominant in the SSA region, followed by capital and land.
- In the US, capital and labor exhibit comparable cost shares.
- The FAO identifies 175 distinct crops, yet the vast majority of research on climate impacts in agriculture has been undertaken on just 4 crops – the main staples: maize, wheat, rice and soybeans.
- Of the 1782 climate impact yield estimates (from 94 independent studies) reported to the IPCC for the AR5, these four crops accounted for 1165 of the total (74 of the 94 studies).
- The grains and oilseeds (staples) sector accounts for just over one-quarter of global agricultural revenue. Other crops are more significant, accounting for nearly one-third of global farm output, and the global value of livestock output is even higher.
- In their baseline, current global annual (population-weighted) labor capacity is estimated to be 80% with regional averages varying from 98% in the high latitudes (i.e., almost no constraints) to 71% in the tropics (significant capacity limitations under current climate).
Other Important Findings
- The paper argues that researchers tend to focus on topics where data and methods are readily available, often overlooking potentially larger impacts.
- The impact of climate change on staple crops, such as maize and wheat, is the primary focus of most existing research.
- The analysis should extend to inputs beyond land, including the consequences of climate change for labor productivity and purchased intermediate inputs.
- The rate of total factor productivity (TFP) growth and the potential for more rapid depreciation of knowledge capital are largely overlooked.
- Non-staple crops, which are important for micronutrient deficiencies, receive less attention, even though climate change may reduce their micronutrient intensity.
- The authors find that humans in the humid tropics are likely more vulnerable to heat stress than crops, which can lead to underestimation of welfare losses in poorer economies.
- Higher temperatures and more variable rainfall will affect the cost and success of future plant breeding.
- The paper highlights the importance of climate change’s impact on the rate of total factor productivity (TFP) growth in agriculture.
- Climate change may also reduce the micro-nutrient intensity of many of the world’s crops.
- The authors highlight the link between investments in science and future growth rates in agricultural productivity.
- Changes in agroecological conditions also elicit adaptation responses from producers which can affect the mix of inputs employed as well as agricultural productivity.
- The value of applying additional irrigation water can be very high in a season with high heat and low rainfall, as well as elevated commodity prices.
- Heat stress reduces feed intake and results in diminished productivity.
- The dominant focus on grains and oilseeds in the climate impacts literature reflects a serious imbalance.
- The study examines how climate change affects the productivity of labor.
- The study highlights the need for additional studies outside of the US.
Limitations Noted in the Document
- The reliance on existing data and methods might lead to an underestimation of the full scope of climate impacts.
- The lack of focus on non-staple crops and livestock production in current climate impact assessments.
- The models and data used may not fully capture the complexity of climate change effects on agriculture.
- The analysis does not fully account for the dynamic impacts of climate change on agricultural productivity, especially the rate of innovation.
- The study acknowledges the limitations in data availability for certain aspects, such as the impacts on livestock and the productivity of intermediate inputs.
- The reliance on existing models and data, and the lack of comprehensive coverage of all agricultural products, limits the scope of the analysis.
- The study acknowledges the challenges in quantifying the effects of climate change on the rate of knowledge capital depreciation and its implications for long-term growth.
Conclusion
The study concludes with a strong emphasis on the limitations of current research practices, particularly the tendency to focus on readily quantifiable impacts while neglecting potentially more significant, yet harder-to-measure effects within the agricultural sector. The authors underscore the need to broaden the scope of climate impact assessments to include non-staple crops, livestock production, and the productivity of various inputs beyond land. The paper calls for a shift in focus, encouraging researchers to venture “beyond the bright streetlights” to explore key impacts that have been largely overlooked, especially the effects of heat stress on labor capacity in agriculture and the long-term implications of climate change on the rate of total factor productivity growth. By omitting the impact of heat stress on humans, most studies of climate impacts greatly understate the welfare losses in the world’s poorest economies. The authors find that countries in Africa, South and Southeast Asia are most severely affected, with agriculture and construction showing the largest drops in output. The paper underscores the need to revisit the methodologies used to assess climate change impacts, particularly how agronomic yield changes are interpreted in economic models, as the choice has significant implications for food price and welfare outcomes. The analysis emphasizes the importance of accounting for the dynamic impacts of climate change, including the effect on knowledge capital accumulation and the associated long-term implications for food security. It calls for more comprehensive approaches to better understand the potential consequences on agricultural production, global food prices, and economic welfare. Furthermore, the paper highlights the need for increased research into the effects of climate change on labor capacity and the importance of adaptation strategies, particularly in the most vulnerable regions. This includes considering the use of new technology pathways for agriculture as well as increased public and private sector collaborations.