Impacts of climate change on agricultural yield and the economic feasibility of adaptation in Sweden

Climate change alters precipitation patterns and temperature. The impact thereof on agricultural yields varies across production seasons and crops. The purpose of this study is to examine the nonlinear effect of seasonal precipitation on the yields of winter wheat, spring wheat, oats, and spring barley using Swedish county-level data from 1979 to 2021. To this end, we use Poisson Pseudo-Maximum Likelihood regressions with high-dimensional fixed effects. Results show that increased precipitation during the early growing season enhances crop yields except for spring barley. Increased precipitation in the second, main growing season negatively affects all crops, but the magnitude of the impact is small compared to that in the early growing season. The impacts are generally more beneficial in the southern part of the country. Irrigation of winter wheat in the spring could be profitable for farms that own irrigation equipment, but for spring crops this would only be the case under extremely dry conditions. Results point to the need for well-tailored climate adaptation strategies.