Frederik Noack will be presenting “Crop Diversity and Droughts” next Wednesday (January 16) in our Work in Progress Environmental Economics Seminar. Its a true work in progress presentation and feedback is highly welcome. The seminar takes place from 12:00 to 1:30 pm in MCML 350 and you are welcome to bring your lunch.
Crop Diversity and Droughts
Delphine Renard & Frederik Noack
Weather extremes such as droughts cause widespread crop failures with severe consequences for both farmers and consumers of agricultural goods. The impact of weather shocks on major crops in terms of calories is well known but these crops are less important in terms of revenues and therefore also for farm incomes and consumer welfare. The response of aggregate crop production to weather shocks may differ from the response of a small set of individual crops for several reasons. First, crop diversity may reduce the impact of weather shocks on aggregate crop production and second, crops differ in their response to weather shocks making the aggregate response of production dependent on the selection of individual crops. Here we show that crop diversity reduces the impact of droughts on food production and revenues using spatial panel data of global crop production and droughts. Our results show that aggregate production declines in response to droughts and that the effect is larger if output is measured in calories compared to revenues. Our results show further that crop diversity reduces the response of aggregate production to droughts and that this stabilizing effect of crop diversity is caused by two main mechanisms. First, crop diversity stabilizes the production of individual crops suggesting that there is a true diversity effect. Second, more drought resistant crops are associated with more diverse crop portfolios, suggesting that crop selection or crop identity also contributes to the stabilizing role of crop diversity. The stabilizing role of crop diversity is especially pronounced in regions such as Sub-Saharan Africa which are also the most vulnerable to droughts and climate change.