Abstract

Considerable attention has been given to the impact of climate variability on farm production, and most of the researches have been provided by agronomists to identify the bio-physical relationship between climatic factors and crop production. Relatively, little attention has been given to this relationship from the standpoint of agricultural economists. This study aims to fill this void by assessing the potential cost of ignoring the impact of weather variability on the estimation of rice production function. Using nationwide representative farm-level data in Taiwan in 2008 and the Geographic Information System method, we merged the appropriate weather data with the existing farm data. Our results point to a biased estimation of the input elasticities if weather conditions are not considered. Moreover, the effects of temperature on rice production are more pronounced than the effects of rainfall.

Key words: Climate variability, farm production function, input elasticities, rice, Taiwan.