Temperature and Precipitation Effects on Mexican Food Crop Yields

ABSTRACT In this paper, we investigate the impacts of weather shocks on crop yields in Mexico using a comprehensive data set of five major crops and weather information at the municipality level for the most recent years, 2003−2021. One of our main aims is to show that the adverse effects of weather shocks on yields are not specific to a few crops but applies to all crops exposed to similar weather conditions. Previous literature has limited the analysis to one or two crops, whereas we cover multiple crops, three growing seasons, and two watering technologies. Following the production function approach, we estimate panel data fixed effect models for each crop and find strong evidence on the adverse impact of exposure to extreme heat, the nonlinear effect of precipitation, and the positive impact of irrigation technology. Our main results show that cumulative heat exposure has nonlinear effects on crop yields, with evidence of diminishing returns and eventual damage for crops such as coffee, corn, and wheat. By contrast, for sugarcane, the estimated relationship is weaker and, in one specification, suggests a positive nonlinear pattern.