Climate Change and Field-Level Crop Quality, Yield, and Revenue

We quantify the effect of weather and climate on the revenue of processing-tomato farmers through yield and quality—quality being an understudied channel despite its role in price determination. Screening out low-quality products introduces selection bias into estimates of the effect of weather and climate on agriculture. Our novel data allow us to estimate this bias. We find that extreme temperatures reduce both yield and quality, leading to reduced revenue. While the yield effect dominates, failing to account for quality leads to a significant underestimate of the effect of temperature exposure on revenue. We predict climate change will significantly reduce yield and quality by century’s end absent adaptation and all else equal. Yield effects are overstated while quality effects are understated when estimation relies on data on a subset of output that exceeds a quality threshold. Empirical work that ignores selection on quality may misrepresent the climate change challenge.