Modelling the impact of climate change and advanced agricultural technologies on grain output: Recent evidence from China

Abstract

The adverse effect of rising temperatures on grain output is gradually spreading across China. On the other hand, technical developments have resulted in substantial changes in the agricultural production system over time. Hence, we assess the effect of temperature on grain yields in addition to the potential effect of some technological factors using a panel dataset spanning the period 1996 to 2020 for selected prominent grain-producing provinces in China: Anhui, Hebei, Heilongjiang, Henan, Hubei, Hunan, Jiangsu, Jiangxi, Jilin, Neimenggu, Shandong, Sichuan, and Liaoning. We apply a novel Method of Moments Quantile Regression (MM-QR) and second–generation estimation techniques, which generate consistent and robust results in the presence of cross–sectional dependency (CSD). The empirical findings from the MM-QR estimator reveal that climate change (via temperature) significantly decreases the grain yields in overall quantiles and the higher negative impact was observed in the 75th and 95th quantiles, while technical factors, irrigated area, and financial support play a substantial role in improving the grain yields in China. In addition, the findings from the D–H panel causality method show the various flows of causal links between the selected variables, considering the grain–producing regions of China: grain yields → temperature, pesticide usage → grain yields, and financial support → grain yields. A bidirectional causality association is observed to exist between fertilizer usage ↔ grain yields, pesticide usage ↔ grain yields, and irrigated area ↔ grain yields. To ensure food security, China's prominent grain–growing regions should strengthen their technological innovation efforts and invest in research and development to produce new varieties that can withstand heat and drought stress and produce better grain yields.