Land and climate - the agricultural sector in a warming context

By 2050, food production systems will face a dual challenge requiring conflicting solutions. On the one hand, population growth in a sustained context of hyper-consumption is driving up production needs. On the other hand, climate change, by increasing the frequency and intensity of extreme heat, produces risks (known as physical) that directly threaten the productivity (and therefore the viability) of cultivated lands (1).

Recent research presented here by Nicolas Schneider and Anthony Schrapffer, respectively Senior Research Engineer - Macroeconomist and Scientific Director at the EDHEC Climate Institute, aims to answer the following questions: What do we know about the relationship between temperature and agricultural yields? Why is a global and informed debate on land use inevitable? What transition and adaptation solutions are available for this key sector?

The temperature-crop yield relationship is non-linear

Over the past twenty years, the agroeconomic literature, driven by a wave of seminal studies from the United States combining microdata and econometric models, has converged towards a consensus. There exists a non-linear inverse relationship between growing season temperature exposure and cropland productivity. More specifically, a threshold effect has been identified: a crop-specific critical value ‘T’, above which any marginal increase in temperature leads to a more than proportional decline in yields, which translates into net production losses for farmers working on the ground (2).

Climate change, by increasing the growing degree day counts beyond this threshold, will reduce land profitability (3) and carry significant macroeconomic implications (e.g., distortions in trade balances and input prices, inflation for consumers). The food security of entire regions is at stake.

Can they be identified? Yes. However, it is important to bear in mind that climate change is not limited to extreme events (which we classify as acute risks); it is accompanied by a long stochastic (gradual) warming process, which alters temperature and precipitation cycles and variability. 

Agriculture, which is vulnerable (4), will have to adjust crop varieties and schedules.

That said, the spatial distribution of temperature anomalies is heterogeneous, which could lead to winners and losers from climate change globally and in absolute terms. Some regions will see their growing season lengthen, allowing new crops to be introduced (such as Pinot Noir in the United Kingdom (5)). Others, such as the Mediterranean (6), will experience extreme events that reduce their yields (drought, water stress).

The final piece of the climate-agriculture puzzle is the CO2 fertilization effect. This gas is so well-mixed in the atmosphere that it gives climate change the characteristics of a public good problem. It also has fertilizing properties that have been known since the second half of the 19th century and are essential to the process of photosynthesis in plants (7). Locally, this could offset the temperature-driven yield declines as caused by global warming (8). A question yet unanswered is by how much? Is there uncertainty on what will the net aggregate effect of both factors look like.

Adaptation: a leverage for improvement in a warming context

Geography is stubborn, at least in the short term, because land and capital are relatively fixed statistics. Farmers will certainly adapt to anticipated lower yields by intensifying existing practices, and therefore by increasing their use of fertilizers and other inputs (water, mechanization, etc.).

In the medium to long term, however, a debate on land use is inevitable (9).

Should low-yield crop rotations be abandoned? Should the distribution of cultivated land and varieties be reorganised? Should we opt for genetically more heat-resilient crops? Or, more broadly, should we raise the issue of geographical substitution of land and move production to less exposed areas that have been under-exploited until now? This goes hand in hand with massive investment in irrigation infrastructure (10) (as opposed to purely rainfed crops).

Such infrastructure benefits agricultural yields by reducing crop stress (11), but it generally pumps water from rivers and groundwater, leaving the future effectiveness of this adaptation margin in the hands of the climate itself (i.e., irrigation is endogenous to climate!).

The increase in the number of disasters affecting producers will inevitably lead to higher insurance premiums in the best-case scenario and a cancellation of coverages in the worst-case scenario.

For smallholders, the situation is serious, even if so-called parametric agricultural insurance models are emerging. These are indexed to local, pre-established rainfall and temperature parameters (rather than an assessment of actual post-disaster production losses), triggering automatic compensation when thresholds are reached, thereby tailored coverage and further diluting the risk.

A major challenge remains: poor correlation between the parameters chosen and actual damage can limit or cancel out compensation (basis risk). Research centres are trying to remedy this by combining climate econometrics, high performance computing systems (HPC), satellite data and weather sensors (12) to more precisely identify crop sensitivity to a wider range of physical risk components.

The agricultural sector facing transition risks

Beyond physical risks, agriculture, forestry and land use change account for 22% of global greenhouse gas emissions (13) and therefore face a high risk associated with the transition to a low-carbon economy, requiring a profound transformation of the agricultural model with significant economic and social implications, but without undermining adaptation efforts (14). The sector's emission sources are diverse: methane from livestock farming, nitrous oxide from nitrogen fertilisers and CO2 associated with land use change (deforestation) and fossil fuels.

Regulations are a risk factor – carbon taxation on emissions, subsidies promoting the use of low-carbon technologies, restrictions on chemical fertilisers, pesticides and land use, and incentives for less intensive production models – and technological innovations are another determining factor (precision agriculture (15) with sensors, drones, AI, alternatives to nitrogen fertilisers).

The sector may also suffer from an increase in production costs. We are thinking primarily of increases in the prices of inputs (fertilisers, energy, agricultural raw materials and machinery), but also of the effects of international competition from countries with more flexible standards and lower costs. However, these developments could be mitigated by the valorisation of biomass (15) (biogas, biofuels, thermal energy).

Consumer preferences will also put pressure on practices, for example through lower meat consumption, a preference for low-carbon foods and an interest in organic and local agriculture (importance of traceability).

Work remains to be done to shed light on all the interactions between the technical aspects of the agriculture supply and its environmental determinants.

References

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(12) Nicolas Schneider : « Pour les investisseurs et les entreprises, une meilleure granularité des informations sur les risques physiques signifie une meilleure capacité d'adaptation aux chocs futurs » (Fév. 2025) EDHEC Vox - https://www.edhec.edu/fr/recherche-et-faculte/edhec-vox/nicolas-schneider-investisseurs-entreprises-meilleure-granularite-informations-risques-physiques-capacite-adaptation-chocs-futurs

(13) Intergovernmental Panel on Climate Change (IPCC). (2023). Climate Change 2023: Synthesis Report. Contribution of Working Groups I, II and III to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change (A. Mokssit, P. Zhai, & H.-O. Pörtner, Eds.). IPCC. https://www.ipcc.ch/report/ar6/syr/

(14) Intergovernmental Panel on Climate Change (IPCC). (2019). Climate change and land: An IPCC special report on climate change, desertification, land degradation, sustainable land management, food security, and greenhouse gas fluxes in terrestrial ecosystems (P.R. Shukla, J. Skea, E. Calvo Buendia, V. Masson-Delmotte, H.-O. Pörtner, D. C. Roberts, ... & J. Malley, Eds.). IPCC. https://www.ipcc.ch/srccl/

(15) Chiriacò, M.V., Dămătîrcă, C., Abd Alla, S. et al. A catalogue of land-based adaptation and mitigation solutions to tackle climate change. Sci Data 12, 166 (2025). https://doi.org/10.1038/s41597-025-04484-0