Agricultural Production Optimization and Marginal Product Response to Climate Change

Abstract

This study introduces a non-parametric approach to estimate the marginal products of agricultural inputs (agricultural land, labor, machinery, fertilizers and pesticides) in Jiangsu province, China. To study the effects of climate change on these marginal products, we used a fixed-effects regression model. The results show an upward trend of inefficiency in Jiangsu’s agricultural production from 2001 to 2018. The marginal products of agricultural land, labor, machinery, chemical fertilizers and pesticides are 1.54 thousand USD per hectare, 0.32 thousand USD per person, 0.31 thousand USD per kWh, 21.63 thousand USD per ton and 0.88 USD per ton, respectively. Climate change refers mainly to temperature and precipitation, and we analyzed their effects on the marginal products. Temperature has a statistically significant positive effect on the marginal product of fertilizers and machinery, whereas precipitation harms the marginal product of land. Two inputs (i.e., land and fertilizer) are critical driving forces in agricultural production. This study recommends government action to improve agricultural efficiency and ensure climate change adaptation.