The effects of data aggregation on econometric estimates of climate change impact on corn and soybean production in the Midwest

Climatologists have attempted to predict changes in regional climate patterns caused by increasing levels of CO$\sb2$ and other trace gases in the atmosphere. Although the effects of climate are felt at the individual firm level, aggregate effects on crop production will determine if significant price movements will occur. Therefore, aggregate economic analysis which is based on theory of the firm under uncertainty is needed to assess the impact of climate change on crop production. Econometric estimation of the relationship between yields and key climatic variables can provide estimates of impact of climate change on yields. Then, acreage response equations are a reasonable alternative for modeling adjustments in regional land allocation in response to changing yield expectations.