Is climate variability subversive for agricultural total factor productivity growth? Long-run evidence from sub-Saharan Africa

It is expected that production in the agricultural sector will be significantly affected by climate change. Therefore, it is projected that countries with extreme climatic conditions will suffer a long-term decline in agricultural productivity beyond the short-term loss of production. Given the gross domestic product (GDP) value of agriculture in many sub-Saharan African (SSA) countries, the effects of climate change on agriculture are likely to permeate their economies. The long- and short-run effects of climate variability on agricultural total factor productivity (TFP) growth in 14 SSA countries are examined using panel data from 1995 to 2016. We employ a twofold approach. First, we use the Data Envelopment Approach (DEA) to calculate the Malmquist Index of Maize Productivity growth. Second, we apply a fully modified ordinary least square estimator and the Granger causality test in heterogeneous mixed panels to evaluate the long- and short-run impacts of climate variability on agricultural TFP development. The empirical results from the long-run analysis show that maize agricultural TFP is negatively associated with climate variability for only five countries. In the short run, our empirical estimation indicates no evidence of causality effect. To mitigate the negative long-run effects – and given that spending on R&D is found to produce negative effects in some of those five countries – policymakers should take immediate action to provide farmers with adequate and expeditious irrigation facilities, including the construction of dams to harvest and store rainfall water for future use.