Effect of Late Season Precipitation on Cotton Yield Distributions

Understanding the impact of late season precipitation on the distribution of cotton yields provides insight into managing yield risks. This research combines Linear Moment Models with historical weather data to assess the impact of late season precipitation extremes on cotton production and revenue. The empirical analysis suggests that late season drought reduces both mean yield and variance. The shift in variance is coupled with an exchange of upside risk for downside risk implying that the variance reduction alone masks an important effect on producer’s risk. Revenue impacts suggest high revenue for irrigated acreage as compared to dryland acreage, and the late season drought impact on revenue shows that the use of irrigation causes increases in revenue as compared to dryland acreage

Effect of Late Season Precipitation on Cotton Yield

Recent changing climate causes reduction in yield. We estimate impact of drought and wet climate on mean, variance, upside and downside risk of Mississippi county level cotton yield data using Moment Based Maximum Entropy framework of Tack et al. (2012). Results suggest that mean effects are rather small, but there is a considerable reallocation of risk across the tails of the distribution. Results will inform producers risk management