Impact of Climate Change on Total Factor Productivity of Agriculture in District Multan

Abstract

Agriculture is particularly vulnerable to climate change because it faces open weather conditions. In uncontrolled open weather circumstances, it's difficult to attain better total factor productivity (TFP), which characterizes agriculture growth in an economy. The study estimated the TFP growth of Pakistan’s agriculture in first step by employing the Tornqvist- Theil index number approach for the period 1990-2019. The time series data for thirteen crops and four livestock categories from 1990 to 2019 were collected from different sources to estimate the TFP. The average annual TFP growth of agriculture was estimated to be 2.14 percent for the study period, and it contributed about 56 percent to total agricultural output growth. The results also indicated that TFP growth in agriculture sector was highest (0.05 percent) during the 1990-2000, while lowest (-2.14 percent) during the last decade. After, TFP index that was calculated in first step was used as dependent variable in second step of analysis. Then we estimated the impact of climate change on TFP in agriculture sector in Multan district. For this first we used ARDL bound test approach for estimation of long run impact of climatic variables. The results showed that there are positive effects of both minimum and maximum temperature on TFP in the study area. The drought and floods have negative impact on TFP but in first lag their effects became positive on TFP. One of the important variables of climate is rain that had positive impact on the TFP growth, with 1% increase in rainfall there was 0.22% increase in TFP at first lag. Improving the adaptation and mitigation practices related to floods and droughts would be required for sustainable growth in TFP in agriculture sector in Multan District.