Working Paper: NBER ID: w29320
Authors: Charles A. Taylor; Wolfram Schlenker
Abstract: Post-war growth in agricultural productivity outpaced the US non-farm economy, spurred by steadily increasing crop yields. We argue that rising atmospheric CO₂ is responsible for a significant share of these yield gains. We present a novel methodology to estimate the CO₂ fertilization effect using data from NASA's Orbiting Carbon Observatory-2 (OCO-2) satellite. Our study complements the many field experiments by regressing county yields on local CO₂ levels across the majority of US cropland under actual growing conditions. For identification, we utilize year-to-year anomalies from county-specific trends, an instrument for those CO₂ anomalies using wind patterns, and a spatial first-differences approach. We consistently find a large CO₂ fertilization effect: a 1 ppm increase in CO₂ equates to a 0.4%, 0.6%, 1% yield increase for corn, soybeans, and wheat, respectively. In a thought exercise, we apply the CO₂ fertilization effect we estimated in our sample from 2015-2021 backwards to 1940, and, assuming no other limiting factors, find that CO₂ was the dominant driver of yield growth—with implications for estimates of future climate change damages.
Keywords: agricultural productivity; CO2 fertilization; crop yields; climate change
JEL Codes: N52; Q11; Q54
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| atmospheric CO2 (Q54) | corn yield (Q13) |
| atmospheric CO2 (Q54) | soybean yield (Q11) |
| atmospheric CO2 (Q54) | wheat yield (Q11) |
| atmospheric CO2 (Q54) | historical increase in crop yields in the U.S. (N52) |
| atmospheric CO2 (Q54) | yield growth under water deficit conditions (O13) |