Extreme temperatures and inequality : evidence from French agriculture

Abstract

Climate change is expected to alter the frequency of occurrence of extreme weather events. Applying quantile regressions on French crop farmers over the period 2002-2017, we quantify the distributional effect of extreme temperatures on farm income. Findings indicate that both hot and cold extreme temperatures substantially reduces farm income. The distributional analysis unveil (i) an important heterogeneity between farmers and (ii) opposite effects of cold and hot extreme temperatures. While cold extremes are found to be more damaging for lowest incomes, and hence increase inequality, hot extremes are found to be more harmful for highest incomes, and decrease inequality. Two possible reasons for this antagonistic impact of extreme temperatures are explored. First, there could be a crop effect: The proportion of corn (resp. rapeseed) in the crop mix decreases (resp. increases) with income. Second, there could be a region effect: The probability of being located in the North increases with income