Date of Completion

11-30-2015

Embargo Period

11-30-2015

Advisors

Eric Njuki, Nathan Fiala

Field of Study

Agricultural and Resource Economics

Degree

Master of Arts

Open Access

Open Access

Abstract

Climate change refers to changes in temperature and precipitation patterns as well as increases in the occurrence of extreme events. In recent years, climate change has gained increasing attention from production economists; however, its effects on productivity have been largely ignored in the literature. Our study aims to address these shortcomings by implementing a Total Factor Productivity (TFP) analysis and decomposing TFP into climatic effect, output-oriented technical efficiency, technological progress, and output-oriented scale efficiency indexes. Our study focuses primarily on climatic effects on TFP growth on dairy farming in two traditional US dairy regions. We use U.S. county level data from 1974 to 2012 in the Northeast (NE) and Midwest (MW) to estimate stochastic production frontier models, which provide the basis for measuring TFP and its components. We find that the coefficients for winter and summer temperatures are highly significant and exhibit a positive and negative relationship with output, respectively. In the Northeast, TFP growth is highest in Cayuga County, NY (3.2%), while in the Midwest, Sanilac County in MI exhibits the highest TFP growth (2.6%). Our results also show that on average, per year summer temperatures have a negative contribution to TFP growth per annum while winter temperatures have a positive contribution to per annum output growth. Precipitation exhibits a mixed effect on TFP growth in both the Northeast and Midwest regions.

Major Advisor

Boris Bravo-Ureta

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