UC Berkeley

Farmers may adapt to climate change by substituting away from the crops most severely affected. In this paper we estimate the substitution caused by a moderate change in climate in the US Midwest. We pair a 10-year panel of satellite-based crop coverage with spatially explicit soil data and a fine-scale weather data set. Combining a proportion type model with local regressions, we simultaneously address the econometric issues of proportion dependent variables and spatial correlation of unobserved factors. We find the change in expected crop coverage and then we link those changes to the expected changes from an estimated climate dependent yield equation. Ceteris paribus, we find that climate induced changes in yield are offset by land coverage changes for rice and cotton but they are strongly amplified for corn and soy.