On the Modelling of Enterprise Level Crop Yields

Abstract

A model for the approximation of enterprise-level crop yields under climate change is proposed which integrates economic and agronomic notions of crop production. The model is potentially useful to policy makers, since it could provide an estimate of the yield volume that can be expected to be produced under climate change; it could increase prediction accuracy compared to farm-level programming models by including omitted factors, e.g. wage. This framework can also be useful to farmers as a normative model recommending input commitment under a changing climate. A general computational strategy for the model is provided.

A geometric definition of the coefficient of risk-aversion, which is intrinsic to the farmer, is offered. An approach to infer the degree of risk-aversion from farm-level accounting data is proposed. The identification strategy for the coefficient of risk-aversion relies on using the duality between the possible production technology representations, suitable data separation and the employment of a grid-search. The introduced definition of the coefficient of risk aversion and the strategy to its identification also hold in the deterministic case for intertemporal preferences.

Keywords: agricultural crop production, climate change, state-contingent approach

JEL Classification: B4, B5, C1, D8, Q1