Anecdotal yield losses due to low chill have happened on relatively small scale and passed undetected in the county-level statistics, especially when only one or two chill measures per county were considered. In this case, while the resulting curves are very similar, I find the structural approach more convincing. First, it has a smaller confidence area, and therefore seems more precise. Second, a polynomial of low order will not approximate the process described by agronomists very well. However, estimating higher order polynomials results in estimates that are not statistically significant. The implications of my estimates for pistachio yields are depicted in the lower half of Figure 3.1. The bottom left panel shows the effects on the 1/4 warmest years in 2000– 2018. They are mostly between 10-20% yield decline. These rates are easy to miss due to substantial yield fluctuations in pistachios. What do these estimates mean for the future of California pistachios? Prediction of yield effects for the years 2020–2040 are depicted in the bottom right panel, again for the 1/4 warmest years in the 2020-2040. They show substantial yield drops, which could amount to costs in the hundreds of millions of dollars. Chapter 4 in this dissertation explores the potential gains from a technology that could help deal with low chill in pistachios: applying kaolin clay mixtures on the dormant trees to block sunlight. Thee expected net present value of this technology is estimated at the billions of dollar in economic gains. Considering my results, there may be significant gains from using these technologies even in warmer years today. Concluding this chapter, I want to stress the fact that even in the era of “big data” in agriculture, data availability is still a challenge when estimating yield responses to temperature in some crops, especially perennials and local varieties.
Weather information required for assessing potential damages and new technologies might not always be available for a researcher. This chapter develops a methodology to recover this relationship,raspberry grow in pots using local weather data and techniques for dealing with aggregated observations. I use this setup to empirically assess the yield effects of insufficient chill in pistachios, recovering this relationship from commercial yields for the first time in the literature. I then look at the threat of climate change to pistachio production in southern California. As winters get warmer, lowering chill portion levels are predicted to damage pistachio yields and disrupt a multi-billion dollar industry within the next 20 years. These results were made possible by using precise local weather data, applying relevant statistical methods, and using agronomic knowledge in the modeling process. This approach for information recovery from a small yield panel, with limited useful variability at first sight, could be useful for other crops as well.In the introduction chapter, I discuss the nature of temperature challenges posed by climate change. The rising average temperatures, according to the empirical literature, might not be the major source of potential loss. Rather, it’s the elongating and fattening temperature distribution tails that would be responsible for much of the damage. Could there be a way for farmers to target these tails directly? If so, such technologies could have potential uses for climate change adaptation. It so happens that farmers already deal with temperature extremes, and are capable of tweaking the tails of temperature distributions to avoid losses. The introduction already discussed “air disturbance technology”, basically large wind generators, used to deal with some types of frosts . Solutions for right side temperature tails exist as well.
Of course, shading plants using nets or fabric is an existing practice, but these technologies are costly and not very flexible. However, other products that reflect sunlight and lower plant exposure to excess heat are available on the market. Perhaps the most common ones are based on a fine kaolin clay powder, which is mixed with water and sprayed directly on plants to form a reflective coat, sometimes referred to as a “particle film”. These products have been commercially available since 1999, and are shown to effectively lower high temperature damages by literally keeping plants cooler . Some manufacturers report a canopy temperature reduction of up to 6oC when using their products. Spraying of this mix requires special rigs and equipment, but the costs are reasonable, and far lower than setting up shading in the form of nets . This technology can be thought of as cheap, disposable shading. Surprisingly, even though kaolin clay has been used by farmers to deal with other problems, less related to climate change , I could find no economic literature discussing this technology. As with the case of air disturbance technology, these types of technologies have mostly been ignored by economists. One reason for this gap in the literature could be that economists have not yet realized that these individual products and practices share a common conceptual framework: they are tweaking temperature distribution tails, while leaving the main probability mass untouched. This is an approach I call “Micro-Climate Engineering” . These are relatively small interventions in temperature distributions, limited in space and time, which aim to avoid the nonlinear effects of the extremes. Farmers know the available technologies for MCE and use them regularly, but their potential applications for climate change have not really been explored. The concept of MCE could be very important for climate change adaptation in agriculture, especially when considering the role of extreme temperatures on predicted future losses. MCE solutions, where feasible and profitable, could assist in preserving current crop yields and delaying more costly adaptation strategies. This chapter sets to explore the concept of MCE in general, and assess the gains from MCE in California pistachios as a case study. Specifically, pistachios are threatened by warming winter days, which could threaten existing acreage within the next twenty years .
This challenge stands out in the existing literature in three ways: first, while much of the climate change literature focuses on annual crops, pistachios are perennial. This means that the opportunity cost of variety switching are higher. Second, the challenge does not occur in the “growing season”, but on the winter months when trees are dormant and seemingly inactive. This emphasizes the importance of climate change effects year round, rather than just in the spring and summer. Third, the challenge stems from a biological mechanism that is not heat stress. Heat stress is perhaps the most obvious process by which rising temperatures can have adverse effects on yields, and by far the most studied in the economic literature on climate change. However, other biological mechanism are affected by weather as well, and can cause substantial yield losses. This paper incorporates agronomic knowledge on bloom disruption due to increased winter temperatures, a mechanism that is relatively unexplored in the economic literature. Scientists at the University of California Cooperative Extension have been experimenting with kaolin clay applications on pistachios, and the results seem promising . This could mean a great deal to growers and consumers. This chapter analyzes the potential economic gains from this MCE application in California pistachios. Introduced to California more than 80 years ago, and grown commercially since the mid 1970’s, pistachio was the state’s 8th leading agricultural product in gross value in 2016, generating a total revenue of $1.82 billion dollars. According to the California Department of Food and Agriculture , California produces virtually all pistachio in theUS,square plastic pots and competes internationally with Iran and Turkey . In 2016, five California counties were responsible for a 97% of the state’s pistachio crop: Kern , Fresno , Tulare , Madera , and Kings . Since the year 2000, the total harvested acres in these counties have been increasing by roughly 10% yearly. Each increase represent a 6 – 7 year old investment decision, as trees need to mature before commercial harvest . The challenge for California pistachios has to do with their winter dormancy and the temperature signals required for spring bloom. I discuss the dormancy challenge and the Chill Portion metric in Chapter 3. It is worth noting that in fact, for the areas covered in this study, chill portions are strongly correlated with the 90th temperature percentile between November and February, the dormancy season for pistachios. The correlation is very strong, with a goodness of fit rating of about 0.91. In essence, insufficient chill is a right side temperature tail effect, comparable with similar effects in the climate change literature. Chapter 3 estimates the yield response of pistachios to CP. Substantial losses are predicted below 60 CP.
Compared to other popular fruit and nut crops in the state, this is a high threshold , putting pistachio on the verge of not attaining its chill requirements in some California counties. In fact, there is evidence of low chill already hurting yields . Declining chill is therefore considered a threat to California pistachios. Chill in most of California has been declining in the past decades, and is predicted to decline further in the future. Luedeling, Zhang, and Girvetz estimate the potential chill drop for the southern part of San Joaquin valley, where virtually all of California pistachio is currently grown. For the measure of first decile, i.e. the amount of CP attained in 90% of years, they predict a drop from an estimate of 64.3 chill portions in the year 2000 to estimates ranging between 50.6 and 54.5 in the years 2045-2060.Together with increasing air temperatures, a drastic drop in winter fog incidence in the Central Valley has also been observed. This increases tree bud exposure to direct solar radiation, raising their temperature even further . The estimates cited above virtually cover the entire pistachio growing region, and the first decile metric is less useful for a thorough analysis of pistachios. I therefore need to create and use a more detailed dataset, in fact the same one described in Cahpter 3. Figure 3.1 shows the geographic distribution of chill and potential damage in the 1/4 warmest years of observed climate and predicted climate . While not very substantial in the past, these losses are predicted to reach up to 50% in some regions in the future.This section develops a model to assess the gains from MCE. This is a single year, short run market model, solving for price and quantity under different winter chill realizations. Equilibrium price and quantity are used to calculate welfare outcomes such as grower profits, consumer surplus, and the total welfare. For each realization, the model is solved twice: once with an option to use MCE, and one without it. The differences in welfare outcomes under the same conditions, with and without MCE, are the welfare gains from MCE. Note that in both cases, agents act optimally. MCE gains are therefore to be interpreted as the difference in welfare measures between a world with MCE and a world without it. I abstract from a benchmark with increased storage, which could theoretically alleviate inter-year fluctuations. Pistachios are usually stored for up to one year . The potential loss rates in a bad weather year are significant. Coping by storage in a meaningful way would require multi-year, double digit storage rate, which seems technically unfeasible.MCE could help overcome a climate challenge for California pistachios. I model the market and assess the potential welfare gains from a reflective coating technology that lowers the effective temperatures in pistachio orchards. The expected NPV in 2019, for the gains from this technology between 2020 and 2040, is predicted to be around $2.7-3.5 billion. These come from consumer surplus gains, as the total gains for growers in the main specifications are negative. The latter result is not unheard of in agricultural settings, where a negative supply shock can actually increase grower profits. For example, Carter et al. show that the 1979 labor strikes in California actually increased revenues and profits for lettuce growers. The simulation results shows the flip side of the coin: solving a supply shock can lower grower profits. While less tangible than actual registered profits, consumer surplus gains are real economic gains enjoyed by the public. This point holds even when discussing a narrower welfare framework for California alone.