Climate Change and Italian Agriculture: Evidence from Weather Shocks

Abstract

We estimate the effect of weather shocks on yield of corn, durum wheat, and grapevine using two-way fixed effect models on Italian province-level panel data at the annual frequency. Our estimates reveal substantial non-linearity in the effect of temperature on agricultural yields, in line with the literature. Furthermore, grapevine appears less sensitive to heat than cereals. Combining our estimates with projections on future climate under the A1B scenario, we find that by 2030 the effects of climate change on crop yield will be non-negative. The crop at the highest risk of losses is corn.

Keywords: temperature shocks, precipitation, agricultural yields, climate change

JEL Classification: Q10, Q54