Distributional heterogeneity in climate change

impacts and
adaptation: Evidence from Indian agriculture
Surender Kumar, Madhu Khanna
Introduction:
● Estimates short and long-run climate change impacts for Indian agriculture using
behavioural models.
○ based on the idea that individuals' actions and decisions are influenced by a
combination of cognitive, social, and environmental factors.
● Economic agents maximise expected outcomes using a long-run choice of inputs,
considering climate change rather than the weather.
● The paper uses panel fixed effect quantile regression approach for estimating the
response function to account for heterogeneity in the potential distribution of
yields.
● Estimates the effect of weather and climate variables on the yields of three crops,
rice, maize (kharif) and wheat (rabi).
PANEL FIXED EFFECT QUANTILE REGRESSION
Used to analyze the relationship between variables in panel data, while accounting for fixed
effects and capturing the heterogeneity across different quantiles of the dependent variable.
Key components:
● Panel data: dataset including observations on multiple entities over time. Combines
cross-sectional and time-series analysis.
● Fixed effects: entity specific characteristics that are constant over time but vary across
entities.
● Quantile regression: estimates the relationship at different points in the conditional
distribution of the dependent variable. Provides insight into how the relationship
between variables varies across different quantiles.
Panel fixed effect quantile regression approach allows for estimating the relationship
between variables in panel data while controlling for fixed effects and examining how
the relationship varies across different quantiles of the dependent variable.
Relevance to this paper:

● Distinguishes between the effects of changes in growing season weather from those due
to changes in long-term climate trends and the heterogeneity in these effects across the
distribution of crop yields.
● Controls for the effect of interactions in location-specific time-invariant variables and
weather variables.
● Quantile regressions provide a complete description of the association between the
distribution of crop yields and their determinants.
● Useful because climate and weather conditions and crop yields are not uniform across the
country.
Empirical Strategy
● Exposure to climatic conditions works as a determinant of long-run outcome
subject to short-run weather conditions. The difference in the long and short
run outcomes depends on the distance between climate and weather
conditions, which is termed as “climate penalty”.
● Conditional on weather, the locations that have weather, realisations similar to
long run, climate conditions, are expected to fare better than locations where
the realised weather conditions are far different than long-run climate
conditions.
● Climate-yield relation:
● Some actions of the economic agent are variable in the long-run but fixed in
the short-run.
● In response to change in climate, all factor inputs can be varied in the long
run, and consequently, the penalty term vanishes.
● Long run response:

● Short run response:

Quantile regression approach allows distributional heterogeneity in the

effects of climatic variables on crop yields in low, average and highly
productive areas.
𝜏th Conditional Quantile:
The conditional quantile of crop yield is denoted by Q𝜏(𝑦𝑖𝑡|𝑥𝑖𝑡), where 𝜏 is the
quantile level, 𝑦𝑖𝑡 is the crop yield in district i at time t, and 𝑥𝑖𝑡 is a vector of
climate and other covariates.
𝜏𝑡ℎ conditional quantile of the crop yield refers to the crop yield at the 𝜏th
quantile of the yield distribution, given the growing season weather and
long-term climate trends.

Changes in maximum temperatures affect crop yields in water stressed areas,

hence impact of Tmax is estimated.
Data:
● Crop yields (output per hectare) = key outcome variable
● ICRISAT-TCI dataset used for information on monthly average Tmax and
average minimum temperature Tmin and total monthly precipitation.
● Provides district level data on Indian agriculture and allied sectors for
1966-2015.
Descriptive statistics:
● Distributional heterogeneity in crop yields and weather and climate variables.
○ Increase in growing season quinquennial average of Tmax for rice and
maize, but decline in Tmax for wheat.
○ Average growing season precipitation has increased for rice and maize
but there’s a decline in growing season precipitation for wheat.
○ Farms with lower yield face higher change in Tmax for rice and maize
while farms with higher yields faced higher changes in Tmax for wheat.
○ Precipitation increase is higher for lower tail of rice and maize, but
decline in precipitation is higher at the upper tail of its distribution for
wheat.
Empirical Results
Rise in Tmax:
1. Adaptation to rising temperatures for maize yields is statistically significant. The short run
effect of an increase in Tmax by 1 degree celsius reduces maize yields by 9% and by 1% in the
long run. Hence penalty inclusive models identify the presence of adaptation, or that B3 is
statistically significant.
2. There is insignificant adaptation to rising Tmax by rice and wheat, as the coefficient to the
climate penalty term is not statistically different from zero.
Precipitation changes:
1. Adaptation to changes in precipitation is statistically significant for maize and wheat, but the
difference in short term and long term impact of climate change is very small in magnitude.
2. Yields of rice and precipitation are positively associated but wheat yields and precipitation
are inversely related.
Naïve model for Rice production: Increase in Tmax

R1: 1966-2015
R2: 1986-2015
Naïve model for Rice production: Decrease in Precipitation

R1: 1966-2015
R2: 1986-2015
Penalty model for rice: Increase in Tmax
Maize production:

M1: 1966-2015
M2: 1986-2015
Wheat Production:
Rice yield responses to Tmax and Precipitation:
Summarising the results:
● The effects of weather and climate changes are asymmetric: effects are small
at the upper tail while their larger impact at the lower tail of the distribution if
the impacts are negative.
● Presence of adaptation to change in temperatures in Indian agriculture is not
uniform across crops.
● There is adaptation to Tmax increase for rice and maize but no significant
difference between short run and long run impacts on wheat.