Climate change impacts on the U.S. agricultural economy

Abstract

The most important aggregate measure of the long run health of the productive component of the agricultural economy is agricultural total factor productivity (TFP). Between 1948 and 2011, average annual input growth in US agriculture averaged approximately 0.07% while annual average output growth averaged roughly 1.5%. That translates into an annual average agricultural TFP growth rate of approximately 1.43%. That growth has led to a remarkable expansion of the productive ability of the US agricultural sector. However, climate change poses unprecedented challenges to U.S. agricultural production because of the sensitivity of agricultural productivity and costs to changing climate conditions. Some studies have examined the effect of climate change on U.S. agriculture. But none has investigated how climate affects the overall U.S. agricultural productivity. This study intends to find out climate change impacts on U.S. agricultural TFP change (TFPC). By correlation analysis with data in 1979-2005, we found that precipitation and temperature had significant positive or negative correlations with U.S. agricultural TFPC. Those correlation coefficients ranged from -0.8 to 0.8. And significant correlations, whether positive or negative, existed in different regions and different seasons. This is important information for policy-makers in decisions to support U.S. agriculture sustainability.