How the Black Swan damages the harvest: Extreme weather events and the fragility of agriculture in development countries

Climate change constitutes a rising challenge to the agricultural base of developing countries. Most of the literature has focused on the impact of changes in the means of weather variables on mean changes in production and has found very little impact of weather upon agricultural production. Instead, we focus on the relationship between extreme events in weather and extreme losses in crop production. Indeed, extreme events are of the greatest interest for scholars and policy makers only when they carry extraordinary negative effects. We build on this idea and for the first time, we adopt a conditional dependence model for multivariate extreme values to understand the impact of extreme weather on agricultural production. Specifically, we look at the probability that an extreme event drastically reduces the harvest of any of the major crops. This analysis, which is run on data for six different crops and four different weather variables in a vast array of countries in Africa, Asia and Latin America, shows that extremes in weather and yield losses of major staples are associated events. We find a high heterogeneity across both countries and crops and we are able to predict per country and per crop the risk of a yield reduction above 90% when extreme events occur. As policy implication, we can thus assess which major crop in each country is less resilient to climate shocks.