A Cost of Tractability? Estimating Climate Change Impacts Using a Single Crop Market Understates Impacts on Market Conditions and Variability

Scientists estimate that U.S. Corn Belt crop yields will increase or decrease, on average, and become more variable with climate change. Corn and soybean farming dominates this region, but studies typically do not assess the joint impact of new distributions of corn and soybean yields on markets. We use a structural economic model with projections of climate-driven yield changes to simulate these effects. Our findings suggest that a narrow focus on a single crop in this key growing region risks underestimating the impact on price distributions and average crop receipts, and can lead to incorrect signs on estimated impacts.