Crop responses to climate warming suggest that yields will decrease as growing-season temperatures increase. Deutsch et al. show that this effect may be exacerbated by insect pests (see the Perspective by Riegler). Insects already consume 5 to 20% of major grain crops. The authors' models show that for the three most important grain crops—wheat, rice, and maize—yield lost to insects will increase by 10 to 25% per degree Celsius of warming, hitting hardest in the temperate zone. These findings provide an estimate of further potential climate impacts on global food supply and a benchmark for future regional and field-specific studies of crop-pest-climate interactions.

Abstract: Using field survey data collected by the authors, this chapter first describes groundwater markets in northern China that have been developing rapidly in the past two decades. Groundwater markets in the area are informal, localized and mostly unregulated. There is little price discrimination, and institutional characteristics tend to be similar in both high- and low-income villages. The privatization of tubewells is one of the most important driving forces encouraging the development of groundwater markets. Increasing water and land scarcity are also major determinants. The chapter also explores the impacts of the emergence of the groundwater markets on agricultural production – including crop water use and crop yields – and farmer income in northern China. Results indicate farmers that buy water from groundwater markets use less water than those that have their own tubewells. However yields of water buyers are not negatively affected. This is probably because water buyers exert more efforts to improve water use efficiency. Results also show that other things held constant, the crop incomes of water buyers are not statistically different from those of well owners. The chapter also finds that groundwater markets in northern China are not monopolistic, supporting the notion that they offer poor rural households affordable access to irrigation water.

This study estimates the impact of road expansion on off-farm activities in rural China. To achieve this goal, econometric models that capture the impact of road expansion on migration and local off-farm works are developed and estimated using individual data. Estimation results show that road expansion encourages farmers to participate in local off-farm work rather than migrate. In addition, road expansion also has a significant impact on the working time and income of local off-farm work.

Abstract: The goal of the present paper is to examine how the expansion of the economy from 2000 has affected rural off-farm labor market participation. Specifically, we seek to determine whether off-farm labor increased after 2000, what forms of employment are driving trends in off-farm labor and whether gender differences can be observed in off farm employment trends. Using a nationally representative dataset that consist of two waves of surveys conducted in 2000 and 2008 in six provinces, this paper finds that off farm labor market participation continued to rise steadily in the early 2000s. However, there is a clear difference in the trends associated with occupational choice before and after 2000. In addition, we find that rural off-farm employment trends are different for men and women. Our analysis also shows that the rise of wage-earning employment corresponds with an increasing unskilled wage for both men and women.

Climate-induced shocks in grain production are a major contributor to global market volatility, which creates uncertainty for cereal farmers and agribusiness and reduces food access for poor consumers when production falls and prices spike. Our study, by combining empirical models of maize production with future warming scenarios, shows that in a warmer climate, maize yields will decrease and become more variable. Because just a few countries dominate global maize production and trade, simultaneous production shocks in these countries can have tremendous impacts on global markets. We show that such synchronous shocks are rare now but will become much more likely if the climate continues to warm. Our results underscore the need for continued investments in breeding for heat tolerance.

Large and regular seasonal price fluctuations in local grain markets appear to offer African farmers substantial inter-temporal arbitrage opportunities, but these opportunities remain largely unexploited: small-scale farmers are commonly observed to "sell low and buy high" rather than the reverse. In a field experiment in Kenya, we show that credit market imperfections limit farmers' abilities to move grain inter-temporally. Providing timely access to credit allows farmers to buy at lower prices and sell at higher prices, increasing farm revenues and generating a return on investment of 28%. To understand general equilibrium effects of these changes in behavior, we vary the density of loan offers across locations. We document significant effects of the credit intervention on seasonal price fluctuations in local grain markets, and show that these GE effects shape individual level profitability estimates. In contrast to existing experimental work, the results indicate a setting in which microcredit can improve firm profitability, and suggest that GE effects can substantially shape microcredit's effectiveness. In particular, failure to consider these GE effects could lead to underestimates of the social welfare benefits of microcredit interventions.