Specialization generally is beneficial in economics. But too much of anything, even economic specialization, may not be a good thing.
“We need to be asking if putting all our eggs in one basket is wise when the basket is more sensitive,” said Ariel Ortiz-Bobea, assistant professor of applied economics and management at Cornell University.
A new study in which Ortiz-Balboa participated finds that Midwest agriculture is increasingly vulnerable to extreme weather shocks because the region has become more reliant on a handful of crops.
The study’s key takeaway: “We find that agriculture is growing more sensitive to climate in Midwestern states for two distinct but compounding reasons: a rising climatic sensitivity of nonirrigated cereal and oilseed crops and a growing specialization in crop production.
“In contrast, other regions specialize in less climate-sensitive production such as irrigated specialty crops or livestock. Results suggest that reducing vulnerability to climate change should consider the role of policies in inducing regional specialization.”
The study evaluated state-level measures of ag productivity that capture how inputs, including seed, fertilizer, equipment and herbicides, are converted into economic outputs. The study compared that information against climate data from 1960 through 2004 to see what happens if weather is treated as an additional input. The study ended at 2004 because key U.S. Department of Agriculture data stopped being available, Ortiz-Bobea said.
The study found that, in the 1960s and ’70s, a 2-degree Celsius rise in temperature during the summer resulted in an 11 percent drop in productivity. But after 1983, the same rise in temperature caused productivity to drop 29 percent.
Nationwide, U.S. agriculture is increasingly specialized, with the Midwest focusing more and more on crop production, Ortiz-Bobea said.
“As an economist, I think specializing in what you’re good at is great,” Ortiz-Bobea said. At the same time, Midwest ag’s increasing sensitivity to extreme weather is concerning
“Specialization is good, but it’s more risky for the system as a whole,” he said. “We’re making a trade-off between weather playing a greater role over time and higher output (from ag specialization).”
The study doesn’t determine whether higher output justifies the increased sensitivity, Ortiz-Bobea said.
“It is unclear from our findings whether the current tradeoff between higher productivity and increased climatic sensitivity is socially desirable. However, our work suggests that the growing climatic sensitivity reported here will render the Midwest region more vulnerable in a warmer world,” the report said.
A fellow at Cornell’s Atkinson Center for a Sustainable Future, Ortiz Bobea collaborated on the paper with Erwin Knippenberg, a Cornell doctoral student in applied economics and management, and Robert G. Chambers of the University of Maryland.
Ortiz-Bobea said the study’s findings are relevant to agriculturalists who question whether climate change is related to human activity or even whether climate is actually changing. Whatever your assessment of climate change, Midwest ag’s increasing sensitivity to weather is clear-cut and important, he said.
Some Midwest communities tied their local economies closely to the Detroit auto industry. That economic specialization was successful when the U.S. auto industry was thriving, but brought pain when the domestic auto industry declined. Crop specialization brings similar risks.
The study doesn’t offer specific suggestions or recommendations on what, if anything, should be done to deal with Midwest crop specialization and the greater risk of climate shock. But it does say that, “Climate change adaptation efforts must focus not only on technological adaptations needed to cope with climatic uncertainties, but also on how agricultural policies and market realities affect the structure of agricultural production.”
To read the report, visit http://advances.sciencemag.org/content/4/12/eaat4343.