Climate and weather impacts on agriculture: The case of Brazil

Abstract

The world's population will rise exponentially in the coming decades, increasing the demand for food and challenging the agricultural sector to ensure food security. Due to the importance of climate conditions for agriculture, this article analyzed two different hypotheses regarding climate impacts on agricultural markets in Brazil. First, farmers only observe the average climate conditions of their region when deciding the type and amount of crop or animal to grow or raise. Second, weather diversions from normal climate conditions cause farmers to deviate from optimal profits. Neither hypothesis was rejected by the data. The 2006 estimated loss from rainfall anomalies was 12.8 billion dollars (in 2014 values).