How to assess future agricultural performance under climate change? A case-study on the Veneto region

Ono i, Lau a; Bianchin, Fede ica; Boa o, Vasco Ladislao A icle How o assess u u e ag icul u al pe o mance unde clima e change? A case-s udy on he Vene o egion Ag icul u al and Food Economics P o ided in Coope a ion wi h: I alian Socie y o Ag icul u al Economics (SIDEA) Sugges ed Ci a ion: Ono i, Lau a; Bianchin, Fede ica; Boa o, Vasco Ladislao (2019) : How o assess u u e ag icul u al pe o mance unde clima e change? A case-s udy on he Vene o egion, Ag icul u al and Food Economics, ISSN 2193-7532, Sp inge , Heidelbe g, Vol. 7, Iss. 1, pp. 1-12, h ps://doi.o g/10.1186/s40100-019-0131-y This Ve sion is a ailable a : h ps://hdl.handle.ne /10419/240249 S anda d-Nu zungsbedingungen: Die Dokumen e au EconS o dü en zu eigenen wissenscha lichen Zwecken und zum P i a geb auch gespeiche und kopie we den. Sie dü en die Dokumen e nich ü ö en liche ode komme zielle Zwecke e iel äl igen, ö en lich auss ellen, ö en lich zugänglich machen, e eiben ode ande wei ig nu zen. 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A case-s udy on he Vene o egion Lau a Ono i * , Fede ica Bianchin and Vasco Boa o * Co espondence: lau a.ono i@ unipd.i Depa men o Land, En i onmen , Ag icul u e and Fo es y, Uni e si y o Padua, Pado a, I aly Abs ac In his pape , we ha e cons uc ed and es ed a simple me hodology o assessing and p edic ing clima e change e ec s on ag icul u al yields. The me hodology ollows wo s eps. Fi s , we econome ically es ima e he ma ginal p oduc o key p oduc ion inpu s (e.g., labo and land), h ough he es ima ion o p oduc ion unc ions. Then, we p edic u u e ag icul u al sec o pe o mance, by assuming a u u e wi h clima e-induced changes in he land use and in ag icul u al labo use, unde di e en IPCC scena ios. We also assume ha no d ama ic echnological change in ag icul u e p oduc ion will occu in he nea u u e, so ha he selec ed inpu s will p esen he same ma ginal p oduc . We assume ha he ag icul u al sec o migh de elop di e en ly unde di e en clima e change-induced scena ios and ha he use o land and labo will change acco dingly. In his way, we a e able o compu e p edic ions on he ag icul u al sec o pe o mance in he u u e, unde e y di e en ci cums ances. We apply he me hodology o p edic ing he sec o pe o mance o he Vene o egion in 2030. Resul s di e acco ding o he selec ed IPCC scena io and consequen inpu use a ia ions. In he selec ed case s udy, o ins ance, land p esen s a e y high p oduc i i y and clima e-induced changes in he land use migh d ama ically (posi i ely and nega i ely) a ec ag icul u al yields unde di e en IPCC scena ios. In his pe spec i e, he clima e change adap a ion and mi iga ion policies and op ions should p ima ily aim a he p ese a ion o land p oduc i i y in Vene o. Keywo ds: Clima e change, IPCC, Cobb-Douglas/ anslog p oduc ion unc ion es ima ion, P oduc ion inpu s ma ginal p oduc i i y In oduc ion Ag icul u e is an economic ac i i y highly a ec ed by bo h clima e change and a ia- bili y. The gene al consensus among scien is s, schola s, and expe s is ha changes in empe a u e and p ecipi a ion will esul in changes in land and wa e egimes ha will subsequen ly a ec ag icul u al p oduc i i y. Resea ch has shown ha he scope o he clima e change impac s on ag icul u e is egion-speci ic. Clima e change is, in ac , likely o a ec ag icul u al sys ems e y di e en ly in a ious pa s o he wo ld. In opical egions, wi h many o he poo es coun ies, impac s on ag icul u al p oduc- i i y a e expec ed o be pa icula ly ha m ul. The ulne abili y o hese coun ies is especially likely o be acu e in ligh o echnological, esou ce, and ins i u ional © The Au ho (s). 2019 Open Access This a icle is dis ibu ed unde he e ms o he C ea i e Commons A ibu ion 4.0 In e na ional License (h p://c ea i ecommons.o g/licenses/by/4.0/), which pe mi s un es ic ed use, dis ibu ion, and ep oduc ion in any medium, p o ided you gi e app op ia e c edi o he o iginal au ho (s) and he sou ce, p o ide a link o he C ea i e Commons license, and indica e i changes we e made. Ag icul u al and Food Economics Ono i e al. Ag icul u al and Food Economics (2019) 7:16 h ps://doi.o g/10.1186/s40100-019-0131-y cons ain s. Expe s p edic ha opical egions will see bo h a educ ion in ag icul- u al yields and a ise in po e y le els as li elihood oppo uni ies o many engaged in he ag icul u al sec o become inc easingly suscep ible o expec ed clima e p essu es. (Ku ukulasu iya and Rosen hal 2013). In no he n Eu opean a eas, on he con a y, clima e change may p ima ily ha e posi i e e ec s h ough inc eases in p oduc i i y and in he ange o species g own, al hough he e may be nega i e e ec s o ag icul- u al on, e.g., he wa e quali y o su ace wa e s. In Eu opean sou he n a eas, he disad an ages will p edomina e wi h lowe ha es able yields, highe yield a iabili y, and a educ ion in sui able a eas o adi ional c ops (Olesen and Bindi, 2002,2004; Bindi and Olesen, 2011; San e amo e al., 2016). The li e a u e on he economic impac o clima e change on he ag icul u al sec o is e y ans e sal wi h espec o me hodologies and applica ions. In his pe spec i e, we can highligh ou main app oaches ha we su ey in wha ollows. The seminal pape by Mendelshon e al. (1994) adop s spa ial compa isons in modeling he impac s on ag icul u e om a Rica dian pe spec i e. The au ho s base hei model on he ollowing wo assump ions: (i) pe ec ly compe i i e ma ke s o bo h ou pu s and inpu s, and (ii) in e es a e, a e o capi al gains, and capi al pe ac e a e equal o all plo s o land. The la e assump ion ensu es p opo ionali y be ween land alue and land en . Consequen ly, i is possible o educe he p o i maximiza ion unc ion o a c oss-sec ional analysis in which he land alue (o , as mos ecen ly sugges ed, he a m’s ne e enue) is eg essed agains clima e and soil cha ac e is ics, and o he con ol a iables. The au ho s, in ac , measu e he economic impac o clima e on land p ices, by using c oss-sec ional da a on clima e, a mland p ices, and o he economic and geophysical da a o almos 3000 coun ies in he USA. Findings show ha highe empe a u es in all seasons excep au umn educe a e age a m alues, while mo e p ecipi a ion ou side o au umn inc eases a m alues. The model is hen applied o a glo- bal wa ming scena io. In his con ex , esul s sugges ha , e en wi hou ca bon dioxide e iliza ion, global wa ming may ha e economic bene i s o ag icul u e. Hanemann (2000) con as s he Rica dian app oach pionee ed by Mendelsohn e al. (Mendelshon e al. 1994,2000) wi h ag onomic models ha es ima e he impac o clima e change on c op yields o p edic he economic e ec on ag icul u e. The Rica dian app oach uses c oss-sec ional da a om di e en loca ions o es ima e he e ec on land alues o changes in clima e a iables such as empe a u e o ain all, while con olling o soil ypes and o he geog aphic and socioeconomic ac o s. Di e en scena ios a e used by he au ho , in o de o assess he impac o clima e change on he alue o a mland and, by in e ence, on ag icul u al p oduc i i y. Mo e ecen wo k by Ku ukulasu ya and Mendelsohn (2008) seeks o in eg a e he ag onomic and Rica dian app oaches by allowing o swi ching o ou pu choices by A ican a me s, using a mul inomial logi model while dis inguishing di e en ag o-ecological zones. A hi d se o s udies uses a a ie y o ag o-clima ic and global clima e change models unde di e en emission scena ios ha include socio-economic aspec s. Applica ions a e bo h a egional and global le el. In his s eam o esea ch, we can men ion he seminal wo k by Pa y (1990) and Pa y e al. (2004) ha analyses he global consequences o c op yields, p oduc ion, and isk o hunge o linked socio-economic and clima e scena ios. Po en ial impac s o clima e change a e es ima ed o clima e change scena ios de eloped om he HadCM3 global clima e model unde he In e go e nmen al Panel on Clima e Ono i e al. Ag icul u al and Food Economics (2019) 7:16 Page 2 o 12 Change Special Repo on Emissions Scena ios (IPCC-SRES). P ojec ed global changes in yield a e calcula ed using ans e unc ions de i ed om c op model simula ions wi h ob- se ed clima e da a and p ojec ed clima e change scena ios. The basic linked sys em (BLS) is used o e alua e consequen changes in global ce eal p oduc ion, ce eal p ices, and he numbe o people a isk om hunge . Au ho s ind ha he c op yield esul s co obo a e he complex egional pa e ns o p ojec ed clima e a iables, CO 2 e ec s, and ag icul u al sys ems ha con ibu e o agg ega ions o global c op p oduc ion. Finally, some s udies use compu able gene al equilib ium (CGE) models in o de o assess he e ec o clima e change on ag icul u e. The wo k o Da win (2004), o ins ance, highligh s wo in e es ing ypes o esul s. Fi s , unce ain y due o a iable p ojec ions o clima e is ai ly la ge o mos o he economic e ec s e alua ed in he analysis. Economic condi ions a he ime o impac in luence he di ec ion and size o as well as he con idence in he economic e ec s o iden ical p ojec ions o g eenhouse gas impac s. The economic a iable ha beha es mos consis en ly is wo ld c op p oduc ion ha may be a ai ly obus indica o o he po en ial impac s o g eenhouse gas emissions. The au ho s esses ha imp o ed economic condi ions, embodied in he socio-economic scena ios, a e no necessa ily a panacea o po en ial g eenhouse- gas-induced damages, pa icula ly a he egion le el. In ac , in some egions, impac s o clima e change o CO 2 e iliza ion ( ha a e bene icial o unde cu en economic condi ions), may be de imen al unde imp o ed economic condi ions ( ela i e o he new economic base). In addi ion, hose egions ha ely on ag icul u al expo s o ela i ely la ge sha es o hei income may be ulne able no only o di ec clima e- induced ag icul u al damages, bu also o posi i e impac s induced by g eenhouse gas emissions elsewhe e. The wo k o Pala nik and Nunes (2014) illus a es an a emp o economically assess, hough he use o GCE models, he po en ial e ec s o clima e change-induced impac s o biodi e si y on he ag icul u al sec o . Such impac s a e measu ed in e ms o changes in land p oduc i i y, changes in ag icul u al ou pu , and, ul ima ely, changes in na ional GDPs. Economic alua ion shows ha clima e change- induced impac s on biodi e si y cause signi ican changes in GDP. Howe e , he in en- si y o hese changes a ies ac oss he economies unde conside a ion. In ac , some coun ies, and espec i e economies, show o be less esilien han o he s and, mos o he ime, he wel a e changes in ol ed clea ly signal he p esence o winne s and lose s. The p esen pape en e s he i s s eam o esea ch on he mic oeconomic/mic o- econome ic analysis o clima e change impac s on ag icul u al yields. I is an o iginal piece o esea ch ha is inspi ed by bo h he indus ial and ag icul u al economic li e a u e on p oduc ion unc ion es ima ions and he economic/clima ologic li e a u e on clima e change e ec s, supe bly summa ized by he IPCC epo s. F om hose backg ounds, he pape builds an o iginal me hodology o analyzing he ag icul u al d i e s and p edic ing he e ec s o clima e change impac s wi h a egional scope, wi h an illus a i e applica ion o he Vene o egion in 2030. The s udy is o ganized as ollows. Sec ion 2 con ains a desc ip ion o he p oposed me hod- ology. Sec ion 3 p esen s he main esul s o he selec ed applica ion. Sec ion 4 concludes. Me hodological amewo k Ou p oposed me hodology is based on wo main s eps. Fi s , we pe o m an econo- me ic analysis o egional ag icul u al p oduc ion unc ions. Secondly, we pe o m Ono i e al. Ag icul u al and Food Economics (2019) 7:16 Page 3 o 12 p edic ions o he main ends and a ia ion in ag icul u al yields, due o (assumed) a ia ions in he main d i e s/p oduc ion inpu s and o selec ed clima e change scena ios. Ag icul u al egional p oduc ion unc ions We model ag icul u al p oduc ion unc ions (bo h Cobb-Douglas and anslog) in o de o ackle and measu e he ma ginal p oduc o each ac o used in he p o- duc ion o he selec ed, ag icul u al yields. 1 We use p oduc ion unc ions ha , in ou se ing, simply desc ibe he echnical ela ionship be ween he (physical) amoun o ag icul u al inpu s and he o al ag icul u al yields, in a pu e mic o- economic ashion. The gene al empi ical o m o he ag icul u al egional p oduc ion unc ions can be syn hesized as in Eq. (1): yi¼x0 iβþεi;ð1Þ whe e y i (yields) and x i (ag icul u al p oduc ion inpu s) a e obse able a iables, and ε i is unobse ed and e e ed o as an e o e m o dis u bance e m. We aim a es ima ing he echnological e iciency h ough he measu emen o each selec ed inpu ma ginal p oduc , and he e o e he ma ginal impac on ag icul u al p o- duc ion. In ou amewo k p oduc ion unc ions a e egional, since echnologies a y acco ding o he selec ed socio-economic applica ions and hey a e also money in- dependen , (no inpu /ou pu p ice is included in he eg ession line). Finally, p oduc- ion unc ions a e empe a u e and clima e in a ian since, by embodying Mendelshon e al. (1994) c i icism, we do no “inse ” a iables like empe a u e and p ecipi a ion le els in he p oduc ion unc ion speci ica ion. The i s s ep o analysis aims a ge ing a echnological pic u e o he ma ginal p oduc o each inpu used o p oducing selec ed ag icul u al ou pu , gi en a de e mined p oduc ion echnology in a gi en pe iod o ime and in a gi en geog aphical egion. The economic li e a u e p esen s a la ge numbe o heo e ical and empi ical p oduc- ion unc ions. In ou sugges ed me hodological amewo k, Eq. (1) is ope a ionalized h ough he use o wo ypes o p oduc ion unc ions. The i s one is a Cobb-Douglas, as desc ibed in Eq. (2).The egionalag icul u al o alou pu q(in logs) depends on a log- linea combina ion o np oduc ion inpu s and an e o e m. ln q¼β1ðÞ 0þX N n¼1 βnln xnþu:ð2Þ The egional Cobb-Douglas empi ical model is easy o es ima e and in e p e and equi es es ima ion o a ew pa ame e s. Main disad an ages a e he (s ingen ) assump ions ha i ms ope a e in a se ing o pe ec compe i ion, wi h all i ms ha ing he same p oduc ion elas ici ies (and ha subs i u ion elas i- ci ies equal 1). The egional anslog p oduc ion unc ion is modeled in Eq. (3). In his case, he egionalag icul u al o alou pu q(in logs) depends on a log-linea combi- na ion o np oduc ion inpu s, he min e ac ions o np oduc ion inpu s, and an e o e m. Ono i e al. Ag icul u al and Food Economics (2019) 7:16 Page 4 o 12 ln q¼β0þX N n¼1 βnln xnþ1 2X N n¼1 X N m¼1 βnm ln xnln xmþuð3Þ The anslog unc ion is e y commonly used in he li e a u e, and i is a gene aliza ion o he Cobb-Douglas unc ion. I is a lexible unc ional o m p o iding a second-o de app oxima ion and less es ic ion on p oduc ion elas ici ies and subs i u- ion elas ici ies. Howe e , he anslog model is mo e di icul o in e p e and equi es es ima ion o many pa ame e s. In addi ion, i can su e om cu a u e iola ions. Finally, bo h Cobb-Douglas and anslog unc ions a e linea in pa ame e s and can be easily es ima ed. P edic ion me hodology and assump ions We a emp o pe o m p edic ion using selec ed p oduc ion unc ion-es ima ed co- e icien s in he eg ession model. We wan o p edic he alue o he dependen a iable (p oduced quan i y/ag icul u al yields), gi en he po en ial clima e change- induced a ia ions o he wo main d i e s o ag icul u al p oduc i i y: land and labo , a a gi en alue o he selec ed explana o y a iables. Since he model is assumed o hold o all po en ial obse a ions, i will also hold ha : y0¼x0 0βþε0;ð4Þ whe e ε 0 sa is ies he same p ope ies as all o he e o e ms. The ob ious p edic o o y 0 is y0¼x0 0bð5Þ As E{b}=β, i is easily e i ied ha his is an unbiased p edic o . 2 The p edic ion exe cise equi es some u he quali a i e specula ions and as- sump ions, since in he u u e, he wo ld (and e e y selec ed ag icul u al egion) migh ha e changed in ways ha a e di icul o imagine, as di icul as i would ha e been a he end o he nine een h cen u y o imagine he changes o he las 100 yea s. None heless, ou key assump ions ha d i e he a ia ions o he x0 0a e he ollowing: 1. We assume ha he e is no echnological shock in ag icul u al p oduc ion, in e ms o d ama ic changes in machine y ha adop e y di e en echnologies wi h espec o he cu en ones, e.g., he d ones. 2. We assume a u u e wi h clima e change. We assume ha clima e change will a ec he ag icul u al sec o in di e en ways, which a e summa ized by he IPCC-p edic ed scena ios (see IPCC; 2000,2007). Each scena io is cons uc ed acco ding o a s o yline. Each s o yline assumes a dis inc ly di e en di ec ion o u u ede elopmen s,such ha he ou s o ylinesdi e ininc easinglyi - e e sible ways. Toge he , hey desc ibe di e gen u u es ha encompass a sig- ni ican po ion o he unde lying unce ain ies in he main d i ing o ces. Ono i e al. Ag icul u al and Food Economics (2019) 7:16 Page 5 o 12 They co e a wide ange o key “ u u e”cha ac e is ics such as demog aphic change, economic de elopmen , and echnological changes. 3. Acco ding o he (p obabilis ic, u u e) occu ence o each scena io, we assume ha land (cul i a ed hec a es) and ag icul u al labo (labo o ce employed in he sec o ) will a y. The ou main scena ios and s o ylines a e summa ized in Table 1. The quan i ica ion o he alue/pe cen age a ia ions o x0 0unde di e en clima e change scena ios is ela i ely disc e iona y and needs assis ance om o he expe s. I is impo an o unde s and how he wo ld will a y and how he scena ios will implemen in o de o de- ine a ange o possible alues ha x0 0can assume, gi en he occu ence o each IPCC scena - ios. Following Ansua egi e al. (2015), we o ganized ocus g oups and mee ings wi h expe s ( o mo e cla i y, see ollowing sec ions o he applica ions) ha cla i y hepossiblee ec so clima e change-induced IPCC scena ios on he ag icul u al sec o and he possible ange o alues ha o x0 0can assume unde each scena io. Fo ins ance, gi en all abo e, i migh (p obabilis ically) be e y unlikely o occu ha egional ag icul u e migh spu and de elop unde a B1 scena io in a ce ain egion. The e o e, land and labo will be used in smalle uni s, wi h a pe cen age a ia ions ha co e a ange ha esea che s and scien is s de e - mine acco ding o he s a e o he a s o knowledge on clima e change and common sense. Table 1 IPCC scena ios IPCC scena io S o y line A1 The A1 scena io desc ibes a u u e wo ld o e y apid economic g ow h, global popula ion ha peaks in mid-cen u y and declines he ea e , and he apid in oduc ion o new and mo e e icien echnologies. Majo unde lying hemes a e con e gence among egions, capaci y building, and inc eased cul u al and social in e ac ions, wi h a subs an ial educ ion in egional di e ences in pe capi a income. The A1 scena io de elops in o h ee g oups ha desc ibe al e na i e di ec ions o echnological change in he ene gy sys em. The h ee A1 g oups a e dis inguished by hei echnological emphasis: ossil in ensi e (A1FI), non- ossil ene gy sou ces (A1T), o a balance ac oss all sou ces (A1B). In his scena io, emissions will a ec he global empe a u e. Tempe a u e inc ease: 1.4–6.4/1.4–3.8°C A2 The A2 scena io desc ibes a e y he e ogeneous wo ld. The unde lying heme is sel - eliance and p ese a ion o local iden i ies. Fe ili y pa e ns ac oss egions con e ge e y slowly, which esul s in con inuously inc easing global popula ion. Economic de elopmen is p ima ily egionally o ien ed and pe capi a economic g ow h, and echnological changes a e mo e agmen ed and slowe han in o he s o ylines. In his scena io, emissions will a ec he global empe a u e. Tempe a u e inc ease: 2.0–5.4 /1.4–3.8°C B1 The B1 scena io desc ibes a con e gen wo ld wi h he same global popula ion ha peaks in mid-cen u y and declines he ea e , as in he A1 s o yline, bu wi h apid changes in economic s uc u es owa d a se ice and in o ma ion economy, wi h educ ions in ma e ial in ensi y, and he in oduc ion o clean and esou ce- e icien echnologies. The emphasis is on global solu ions o economic, social, and en i onmen al sus ainabili y, including imp o ed equi y, bu wi hou addi ional clima e ini ia i es. In his scena io, emissions will a ec he global empe a u e. Tempe a u e inc ease: 1.1–2.9/1.4–3.8°C B2 The B2 scena io desc ibes a wo ld in which he emphasis is on local solu ions o economic, social, and en i onmen al sus ainabili y. I is a wo ld wi h con inuously inc easing global popula ion a a a e lowe han A2, in e media e le els o economic de elopmen , and less apid and mo e di e se echnological change han in he B1 and A1 s o ylines. While he scena io is also o ien ed owa d en i onmen al p o ec ion and social equi y, i ocuses on local and egional le els. In his scena io, emissions will a ec he global empe a u e. Tempe a u e inc ease: 1.4–3.8°C Sou ce. IPCC Special Repo on Emissions Scena ios Ono i e al. Ag icul u al and Food Economics (2019) 7:16 Page 6 o 12 Finally, on he me hodological poin o iew, he di e en assumed alues o x0 0(acco - ding o he selec ed IPCC scena io) a e hen mul iplied by b, he anslog-es ima ed coe i- cien s o land and labo ma ginal p oduc s (as in Eq. 5), in o de o compu e he clima e change-induced a ia ions in ag icul u al yields. An applica ion o o he no he n I alian ag icul u al sec o : he Vene o egion We apply ou p oposed me hodological amewo k o s udy possible impac s o clima e change on ag icul u al yields in Vene o in 2030. Vene o is a egion loca ed in he No h-Eas pa o I aly and is a e y p oduc i e ag icul u al e i o y. The 2015 OUTLOOK (h p://www. egione. ene o.i /web/ag icol u a-e- o es e) o he ag icul u al ac i i ies in he Vene o egion epo s, in ac , an inc ease in he numbe o employees (+ 2% o 61,224 uni s) and expo g ow h (+ 12.8 wi h espec o he p e ious yea ) ha achie ed 4.3 billion eu o, a eco d ne e achie ed be o e by he Vene o p ima y sec o . E idence shows a pa icula ly encou aging pe o mance o soy and whea c ops. The de- sc ip ion o he s a us quo, howe e , is an impo an piece o in o ma ion ha su e s add- i ional analysis, o en policy d i en and demanded, aiming a explaining causal ela ionships and u u e de elopmen s and ends, in pa icula unde clima e change sce- na ios. The ollowing pa ag aphs, he e o e, con ain an applica ion o he me hodology p oposed in Sec ion 2. Tes ing egional ag icul u al p oduc ion unc ions We use a ich da ase p o ided by he Fa m Accoun ancy Da a Ne wo k (FADN) ha con ains 8036 obse a ions in he pe iod 2009–2012. The da ase con ains b oad in o ma ion on a la ge sample o Vene o a ms and hei legal, accoun ing, economic, and demog aphic s uc u es and cha ac e is ics. The da ase con ains a b oad a ie y o in o ma ion. I spans om pu ely echnological and ag icul u al da a ( a ms’yields quan i y and a ie y, numbe /quan i ies/ ypes o used p oduc ion inpu s) o accoun - ing-economic igu es ( i ms cos s, e enues, and p o i ma gins) and om ins i u- ional hin s (legal s a us o he a ms, p ope y igh s de ini ion and a ibu ion, ce i ica ion s anda ds) o sociological-demog aphics inpu s ( amily composi ion, gende o he a me ). 3 Table 2p o ides desc ip i e s a is ics o he da a. Fo he case a s udy, and gi en a ailable da a, we ha e es ima e bo h ag icul u al Cobb-Douglas and anslog speci ica ions using a pooled OLS eg ession me hods o e o he me hods o es ima ing such a small panel. In pa icula , pooled OLS is a mo e app op ia e es ima o o andomly sampled c oss sec ions o indi iduals a di e en poin s in ime, like in he case a s udy, and di e en ly om balanced/unbalanced panel Table 2 Desc ip i e s a is ics Va iable Mean S anda d de ia ion Min Max Ag icul u al yields 2230 9400.716 0 225,000 Machine y 309 1416.609 0 104,000 Labo 732.21 2699.75 0 136,000 Land 12.47 27.35 0 454 Wa e 196.30 1339 0 400 No e: As de ined in he FADN da ase , ag icul u al yields and seeds a e measu ed in quin als, machine y in hou s o use; labo in hou s o wo k; land in hec a es; and wa e in cubic me e s Ono i e al. Ag icul u al and Food Economics (2019) 7:16 Page 7 o 12 da a, which eco d c oss sec ions o he same indi iduals a di e en poin s in ime. Balanced panel da a eco d all di e en poin s in ime o all indi iduals. Un- balanced panel da a do no eco d he same/all di e en poin s in ime o all indi iduals in he da ase . P oduc ion unc ion es ima es A e se e al checks and a emp s, Table 3p esen s empi ical esul s o bo h Cobb-Douglas and anslog speci ica ions. Cobb-Douglas es ima es Column 2 con ains es ima ed coe icien s o he selec ed Cobb-Douglas speci ica ion. A 1% inc ease in he use o machine y, labo , wa e , and land espec i ely p oduces a 0.03%, 0.23%, 0.16%, and 0.60% inc ease in he ag icul u al yields, i.e., has a posi i e impac on p oduc ion, e en i a diminishing ma ginal e u ns. The es ima ed co- e icien o land p esen s he highes ma ginal p oduc i i y and is s a is ically signi i- can , as well as he es ima ed coe icien s o labo and wa e . On he con a y, a 1% inc ease in he use o machine y only gene a es a 0.03% inc ease in he yields. The la e coe icien , howe e , is no s a is ically signi ican . I is wo h signaling ha he es ima ed p oduc ion unc ion (and unde lying p oduc ion echnology) p esen s cons an e u ns, since he sum o all b n ( he es ima ed coe icien s o β n is a ound 1). The es ima ed “pic u e”in he selec ed ime ame shows a echnology ha p oduces a cons an e u ns, whe e land is he s ee ing engine o p oduc ion. T anslog es ima es Column 3 con ains es ima ed coe icien s o he selec ed anslog speci ica ion. Fo he sake o simplici y, we ha e selec ed he main p oduc i e inpu s (labo and land). The esul s show ha a 1% inc ease in he use o labo and land espec i ely p oduces a 0.31% and 1.15%, inc ease in he ag icul u al yields. The anslog speci ica ion high- ligh s a posi i e impac o he selec ed inpu s on p oduc ion, e en i wi h diminishing ma ginal e u ns o labo and inc easing ma ginal e u ns o land. A nega i e es ima ed coe icien o he e ec o he in e ac ion e m (labo *land) would imply ha Table 3 Empi ical es ima es o selec ed p oduc ion unc ions empi ical speci ica ions Dependen a iable: ag icul u al yields (2009–2012) Explana o y a iables Cobb-Douglas speci ica ion T anslog speci ica ion (Log)machine y 0.03 – (Log)labo 0.23*** 0.32** (Log)wa e 0.16*** – (Log)land 0.60*** 1.16*** (Log)labo 2 –0.05*** (Log)land 2 –0.06*** (Log)labo *land –−0.07*** Cons an 4.01*** 4.15*** Rsqua ed 0.67 0.68 ***5% s a is ical signi ican , *10% s a is ical signi ican Ono i e al. Ag icul u al and Food Economics (2019) 7:16 Page 8 o 12