The Potential Effects of Climate Change on the Productivity , Costs , and Returns of U . S . Dairy Production

Climate change could affect the costs and returns of livestock production by altering the thermal environment of animals thereby affecting animal health, reproduction, and the efficiency by which livestock convert feed into retained products (especially meat and milk). In the United States, concentrated livestock operations are located in a variety of climatic regions, suggesting that the industry could adapt to future changes in temperature and weather patterns resulting from global warming. However, this adaption could be costly. We use nationally representative data on dairy producers coupled with finely-scaled climate data to empirically examine how producers’ costs, returns, and production systems vary across U.S. regions as a function of the local climate. * Senior authorship is shared. The authors are economists with the Economic Research Service of the U.S. Department of Agriculture. The views expressed are the authors' and do not necessarily reflect those of the Economic Research Service or the USDA. Please direct correspondence to: Nigel Key, 1800 M St. NW, Washington, DC 20036. [email protected]. 1 Global climate change is expected to alter temperature, precipitation, atmospheric carbon dioxide levels, and water availability in ways that will affect the productivity of crop and livestock systems (Hatfield, et al. 2008). For livestock systems, climate change could affect the costs and returns of production by altering the thermal environment of animals thereby affecting animal health, reproduction, and the efficiency by which livestock convert feed into retained products (especially meat and milk). In the United States, concentrated livestock operations are located in a variety of climatic regions, suggesting that the industry could adapt to future changes in temperature and weather patterns resulting from global warming. However, this adaption could be costly. Climatic changes could increase thermal stress for animals and thereby reduce animal production and profitability by lowering feed efficiency, milk production, and reproduction rates (Fuquay, 1981; Morrison 1983; St-Pierre, Cobanov and Schnitkey, 2003). Methods that livestock producers use to mitigate thermal stress – including modifications to animal management or housing –tend to increase their production costs. Past research on climate’s effects on livestock production largely uses engineering models to predict how productivity may decline with higher temperatures. Very few studies address climate mitigation costs, and those that do usually account for these costs based on predictive models rather than survey evidence of actual behavior. In this article we take a very different approach and use nationally representative data on dairy producers coupled with finely-scaled climate data to empirically examine how producers’ costs, returns, and production systems vary across U.S. regions as a function of the local climate. This analysis is a preliminary step towards comprehending how the livestock industry has adapted to regional variations in climate, and eventually to understanding the costs of adaptation to possible future climate changes.