Gro launches new Real-Time Assessment on China’s Food SecurityLearn More
Managing weather risk is one of farmers’ toughest tasks. That’s become even harder as climate has become increasingly volatile over the past decade, sending crop yields gyrating from year to year and upending conventional farm economics.
NOAA tracks climate volatility with its straightforward Climate Extremes Index, but this covers only broad regions of the United States and the results have a one-year lag. Using the Gro Intelligence data platform, users can create their own volatility index focused on specific regions and in nearly real time.
In this Featured Insight, we describe why the growing preponderance of extreme climate conditions is as important to agriculture as are average weather outcomes, which are the more typically tracked climate data. We also describe how we constructed climate volatility indexes for two specific regions using Gro’s global data on temperature, precipitation, soil moisture, and other remotely sensed variables.
Agriculture is one of the economic sectors most vulnerable to climate volatility. Businesses all along the agricultural supply chain need to prepare for additional economic risk when the weather becomes less predictable.
In the past decade, US climate volatility has increased substantially. In 2010, the NOAA Climate Extremes Index’s 10-year moving average for the whole US was 20.6%, just slightly above the 20% that is considered the index’s normal. By 2018, however, the 10-year moving average had jumped by more than half to 31.8%, as the index incorporated the three most extreme weather years on record—2012, 2016, and 2017. The only other time the 10-year average rose significantly above normal was in the 1920s, when it reached 23.1%.
Climate volatility measures quantify the frequency and intensity of extreme weather conditions relative to normal. Quantifying weather volatility provides a useful input for any analysis where weather plays a role. For that purpose, NOAA developed the US Climate Extremes Index (CEI), whose data goes back more than a century, with the goal of distilling a complex set of climatic data into a single indicator.
CEI is constructed using temperature, precipitation, and the Palmer Drought Severity Index (PDSI), which is an estimate of relative dryness using historical temperature and precipitation data. CEI uses the following five indicators: 1) the percentage of the US with maximum temperatures much above or much below normal, 2) the percentage of the US with minimum temperatures much above or much below normal, 3) the percentage of the US in severe drought or severe moisture surplus, 4) the percentage of the US with a much greater than normal proportion of precipitation derived from extreme single-day precipitation events, and 5) the percentage of the US with a high concentration of days with precipitation or a high concentration of days without precipitation.
“Much above” and “much below” normal thresholds are defined as values falling in the upper and lower tenth percentile of the local period of record. The CEI is also structured so that the expected value of each indicator, and the overall CEI, is 20% in any given year. Further methodological details can be found on the NOAA website here.
The Climate Extremes Index is also calculated for each US Climate Region and shows that climate volatility has varied widely by area of the country. For example, in the West, which includes California, the latest 10-year average CEI is 36.4%; for the Upper Midwest it’s 35.1%, 32.6% for the Ohio Valley, and 31.8% for the Southeast. In contrast, the Northern Plains’ 10-year average CEI is just 27.2%.
The CEI’s Climate Regions aren’t categorized based on agriculture. Gro users, wanting to focus on specific agricultural areas, can perform these calculations for any custom region, including those targeted to specific crops and those outside the US, by using the methodology described lower in this article.
The most obvious way climate volatility impacts agriculture is through higher variation in yields. A greater frequency of heat stress events has been shown to severely reduce crop yields. Water availability may become less certain, which can also cut yields or lead to increased outlays for irrigation. A study sponsored by the European Commission that simulated 29 crop/country pairs concluded that production and prices of corn, soybeans, and wheat were highly sensitive to agroclimatic extremes. The study noted that weather volatility in a single region could have significant economic impacts even at the global level.
On the other hand, reduced frost frequency in typically cold regions, or greater precipitation in dry regions, can increase yields, which can in turn depress prices. Storage operators may not have enough room to accommodate the oversupply and on-field crop abandonment may increase.
Heightened weather uncertainty can confound conventional farm economics, throwing off farmers’ planting decisions. Revenues dependent on crops at higher risk for flood or drought need to be protected by additional insurance. Even extreme weather in other regions can cause the prices of key planting inputs, such as energy and fertilizer, to unexpectedly soar.
Perennial crops, such as grapes, almonds, and avocados, represent a different challenge when it comes to climate volatility. An analysis of perennial crops in California, which has been ravaged by drought in recent years, predicted that such climate uncertainty can be expected to reduce yields by up to 40% by 2050. Significant infrastructure investment would be needed to expand perennial crops into cooler regions. In addition, up to 30 years of lead time is necessary for proper cultivation of orchards and vineyards.
NOAA’s Climate Extremes Index is currently available through 2018. Major weather events have continued in 2019, including widespread spring flooding in the US Midwest and an early blizzard last weekend in the Northern Plains, which caused frost damage and delayed harvest for late-maturing corn and soybeans in North Dakota. Late planting and wet weather have also raised concerns about the quality of the spring wheat crop in the US and Canada, two of the biggest exporters of high-protein wheat.
Elsewhere, a major heat wave impacted corn and sugar beet yields in Europe this summer; two devastating cyclones hit Mozambique, wiping out millions of acres of cropland; winter wheat output in Australia was reduced by persistent drought; and intense Indian monsoon rains late in the season caused much of the country to shift rapidly from drought to floods, causing changes in yield expectations for a variety of crops.
Many of these climate events, and their impact on agriculture, have been previously covered by Gro Intelligence Insights. Please see the links at the bottom of this article for more detailed discussions.
A Gro analysis of 14 major US crops showed a higher probability of extreme yields in abnormally volatile climate years. Our study found that there was an equal likelihood of yields surprising to the upside or downside in volatile weather years. However, the downside surprises were of greater magnitude for most of the crops, leading to a negative average detrended yield in most cases.
Since 1950, there were seven years where the NOAA CEI was 30% or higher: 1998, 2006, 2012, 2015, 2016, 2017, and 2018. In those seven years, yields were more than twice as likely to be extreme, defined as at least one-and-a-half standard deviations above or below trend. Detrended national yields and the CEI were positively correlated over a 30-year window for 13 of the 14 crops. As a result, our analysis concluded that climate extremes had a notable impact on the volatility of agricultural yields.
Gro users can construct their own version of the Climate Extremes Index using the data in Gro and the methodology that NOAA adopted for its index, described here. An index can be constructed for almost any region, not just the United States, and at a monthly frequency. For example, in the charts below, we calculate a monthly index for Argentina and Yunnan province, one of the largest crop-growing regions in China.
To build these examples, we use Gro’s database of observed temperature and precipitation series dating back to the 19th century. These data are averaged by district to create a single continuous time series that spans more than a century. If necessary, temperature and precipitation data can be supplemented by remotely sensed sources, such as satellites, beginning in 2000.
We also use a Gro-derived drought index based on remotely sensed evapotranspiration data, which is the combined quantity of water removed via transpiration from plants and via direct evaporation from soil, water, and vegetation surfaces.
Gro users can also add forward-looking climate indicators to their models. NOAA’s Global Forecasting System (GFS) contains temperature and precipitation forecasts up to 15 days in advance. GFS could be used to monitor short-term weather risks and predict future drought index readings during periods when crops are most susceptible to weather risk.
For longer-range forecasts, the Multivariate ENSO Index, a newly added source in Gro measuring El Nino and La Nina conditions, may be shown to predict future climate volatility in some regions.
Understanding climate volatility patterns and at-risk regions can help assess vulnerabilities in advance and mitigate risks associated with adverse weather. Studies have shown that many businesses have not suitably acknowledged the risk that potential climate change poses. Therefore, simply recognizing and contextualizing climate volatility should be a step in the right direction for better weather-risk management.
By quantifying extreme climate events, and applying the methodology to all areas of the globe, policy makers can better decide where to invest in infrastructure improvements. Financial institutions can get a better handle on weather risks and improve pricing of insurance products. Planting decisions can be improved by a more concrete assessment of such consequential, albeit infrequent, events.
Related Insights from Gro Intelligence:
What Information Do We Collect?
The information we gather enables us to personalize, improve and continue to operate the Services. We collect the following types of information from our users.
IP Address Information and Other Information Collected Automatically:
· We automatically receive and record information from your web browser when you interact with the Services, including your IP address and cookie information. This information is used for fighting spam/malware and also to facilitate collection of data concerning your interaction with the Services (e.g., what links you have clicked on).
· Generally, the Services automatically collect usage information, such as the number and frequency of visitors to the Site. We may use this data in aggregate form, that is, as a statistical measure, but not in a manner that would identify you personally. This type of aggregate data enables us and third parties authorized by us to figure out how often individuals use parts of the Services so that we can analyze and improve them.
Information Collected Using Cookies:
· Most browsers have an option for turning off the cookie feature, which will prevent your browser from accepting new cookies, as well as (depending on the sophistication of your browser software) allowing you to decide on acceptance of each new cookie in a variety of ways.
We collect statistical information about how users collectively use the Services (“Aggregate Information”). Some of this information may be derived from Personal Information. This statistical information is not Personal Information and cannot be tied back to you or your web browser.
How, and With Whom, Is My Information Shared?
IP Address Information:
Information You Elect to Share:
We share Aggregate Information with our partners, service providers and other persons with whom we conduct business. We share this type of statistical data so that our partners can understand how and how often people use our Services and their services or websites, which facilitates improving both their services and how our Services interface with them. In addition, these third parties may share with us non-private, aggregated or otherwise non Personal Information about you that they have independently developed or acquired.
Information Shared with Our Agents:
We employ and contract with people and other entities that perform certain tasks on our behalf and who are under our control (our “Agents”). We may need to share Personal Information with our Agents in order to provide products or services to you. Unless we tell you differently, our Agents do not have any right to use Personal Information or other information we share with them beyond what is necessary to assist us. You hereby consent to our sharing of Personal Information with our Agents.
Information Disclosed Pursuant to Business Transfers:
In some cases, we may choose to buy or sell assets. In these types of transactions, user information is typically one of the transferred business assets. Moreover, if we, or substantially all of our assets, were acquired, or if we go out of business or enter bankruptcy, user information would be one of the assets that is transferred or acquired by a third party. You acknowledge that such transfers may occur, and that any acquirer of us or our assets may continue to use your Personal Information as set forth in this policy.
Information Disclosed for Our Protection and the Protection of Others:
Information We Share With Your Consent:
Except as set forth above, you will be notified when your Personal Information may be shared with third parties, and will be able to prevent the sharing of this information.
Is Information About Me Secure?
We store all of our information, including your IP address information, using industry-standard techniques. We do not guarantee or warrant that such techniques will prevent unauthorized access to information about you that we store, Personal Information or otherwise.
What Information of Mine Can I Access?
You can access and delete cookies through your web browser settings.
California Privacy Rights: Under California Civil Code sections 1798.83-1798.84, California residents are entitled to ask us for a notice identifying the categories of personal customer information which we share with our affiliates and/or third parties for marketing purposes, and providing contact information for such affiliates and/or third parties. If you are a California resident and would like a copy of this notice, please submit a written request to the following address: 1156 6th Ave, 7th Floor, New York, NY 10036
What If I Have Questions or Concerns?
If you have any questions or concerns regarding privacy using the Services, please send us a detailed message to email@example.com. We will make every effort to resolve your concerns.
Effective Date: March 11, 2014
b. You shall not (directly or indirectly):i. take any action that imposes or may impose (as determined by us in our sole discretion) an unreasonable or disproportionately large load on our (or our third party providers’) infrastructure;ii. interfere or attempt to interfere with the proper working of the Services or any activities conducted on the Services;iii. bypass, circumvent or attempt to bypass or circumvent any measures we may use to prevent or restrict access to the Services (or other accounts, computer systems or networks connected to the Services);iv. use manual or automated software, devices, or other processes to “crawl” or “spider” any page of the Site;
v. harvest or scrape any Content from the Services;
vi. otherwise take any action in violation of our guidelines and policies;vii. decipher, decompile, disassemble, reverse engineer or otherwise attempt to derive any source code or underlying ideas or algorithms of any part of the Services (including without limitation any application), except to the limited extent applicable laws specifically prohibit such restriction;viii. modify, translate, or otherwise create derivative works of any part of the Services; orix. copy, rent, lease, distribute, or otherwise transfer any of the rights that you receive hereunder.c. We also reserve the right to access, read, preserve, and disclose any information as we reasonably believe is necessary to:i. satisfy any applicable law, regulation, legal process or governmental request;ii. enforce these Terms of Service, including investigation of potential violations hereof;
iii. detect, prevent, or otherwise address fraud, security or technical issues;
iv. respond to user support requests; or
v. protect the rights, property or safety of us, our users and the public.4. Third Party Services. The Services may permit you to link to other websites, services or resources on the Internet, and other websites, services or resources may contain links to the Services. When you access third party resources on the Internet, you do so at your own risk. These other resources are not under our control, and you acknowledge that we are not responsible or liable for the content, functions, accuracy, legality, appropriateness or any other aspect of such websites or resources. The inclusion of any such link does not imply our endorsement or any association between us and their operators. You further acknowledge and agree that we shall not be responsible or liable, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any such content, goods or services available on or through any such website or resource.5. Termination. We may terminate your access to all or any part of the Services at any time, with or without cause, with or without notice, effective immediately. All provisions of these Terms of Service which by their nature should survive termination shall survive termination, including, without limitation, ownership provisions, warranty disclaimers, indemnity and limitations of liability.6. Warranty Disclaimer.a. You release us from all liability for you having acquired or not acquired Content through the Services. We make no representations concerning any Content contained in or accessed through the Services, and we will not be responsible or liable for the accuracy, copyright compliance, or legality of material or Content contained in or accessed through the Services.b. THE SERVICES AND CONTENT ARE PROVIDED “AS IS”, “AS AVAILABLE” AND WITHOUT WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF TITLE, NON-INFRINGEMENT, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, AND ANY WARRANTIES IMPLIED BY ANY COURSE OF PERFORMANCE OR USAGE OF TRADE, ALL OF WHICH ARE EXPRESSLY DISCLAIMED. WE, AND OUR DIRECTORS, EMPLOYEES, AGENTS, SUPPLIERS, PARTNERS AND CONTENT PROVIDERS DO NOT WARRANT THAT: (I) THE SERVICES WILL BE SECURE OR AVAILABLE AT ANY PARTICULAR TIME OR LOCATION; (II) ANY DEFECTS OR ERRORS WILL BE CORRECTED; (III) ANY CONTENT AVAILABLE AT OR THROUGH THE SERVICES IS FREE OF VIRUSES OR OTHER HARMFUL COMPONENTS; OR (IV) THE RESULTS OF USING THE SERVICES WILL MEET YOUR REQUIREMENTS.7. Limitation of Liability. IN NO EVENT SHALL WE, NOR OUR DIRECTORS, EMPLOYEES, AGENTS, PARTNERS, SUPPLIERS OR CONTENT PROVIDERS, BE LIABLE UNDER CONTRACT, TORT, STRICT LIABILITY, NEGLIGENCE OR ANY OTHER LEGAL OR EQUITABLE THEORY WITH RESPECT TO THE SERVICES FOR ANY (I) LOST PROFITS, DATA LOSS, COST OF PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES, OR SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE, COMPENSATORY OR CONSEQUENTIAL DAMAGES OF ANY KIND WHATSOEVER, SUBSTITUTE GOODS OR SERVICES (HOWEVER ARISING), (II) BUGS, VIRUSES, TROJAN HORSES, OR THE LIKE (REGARDLESS OF THE SOURCE OF ORIGINATION), OR (III) DIRECT DAMAGES IN EXCESS OF $50.00.8. Governing Law and Jurisdiction. These Terms of Service shall be governed by and construed in accordance with the laws of the State of New York, including its conflicts of law rules, and the United States of America. You agree that any dispute arising from or relating to the subject matter of these Terms of Service shall be governed by the exclusive jurisdiction and venue of the state and Federal courts of New York County, New York.9. Miscellaneous.a. Modification. We reserve the right, in our sole discretion, to modify or replace any of these Terms of Service, or change, suspend, or discontinue the Services at any time. Your continued use of the Services following notification of any changes to these Terms of Service constitutes acceptance of those changes.b. Entire Agreement and Severability. These Terms of Service are the entire agreement between you and us with respect to the Services, including use of the Site, and supersede all prior or contemporaneous communications and proposals (whether oral, written or electronic) between you and us with respect to the Services. If any provision of these Terms of Service is found to be unenforceable or invalid, that provision will be limited or eliminated to the minimum extent necessary so that these Terms of Service will otherwise remain in full force and effect and enforceable. The failure of either party to exercise in any respect any right provided for herein shall not be deemed a waiver of any further rights hereunderc. Force Majeure. We shall not be liable for any failure to perform our obligations hereunder where such failure results from any cause beyond our reasonable control, including, without limitation, mechanical, electronic or communications failure or degradation.d. Assignment. These Terms of Service are personal to you, and are not assignable, transferable or sublicensable by you except with our prior written consent. We may assign, transfer or delegate any of our rights and obligations hereunder without consent.e. Agency. No agency, partnership, joint venture, or employment relationship is created as a result of these Terms of Service and neither party has any authority of any kind to bind the other in any respect.f. Notices. Unless otherwise specified in these Term of Service, all notices under these Terms of Service will be in writing and will be deemed to have been duly given when received, if personally delivered or sent by certified or registered mail, return receipt requested; when receipt is electronically confirmed, if transmitted by facsimile or e-mail; or the day after it is sent, if sent for next day delivery by recognized overnight delivery service. Electronic notices should be sent to firstname.lastname@example.org. No Waiver. Our failure to enforce any part of these Terms of Service shall not constitute a waiver of our right to later enforce that or any other part of these Terms of Service. Waiver of compliance in any particular instance does not mean that we will waive compliance in the future. In order for any waiver of compliance with these Terms of Service to be binding, we must provide you with written notice of such waiver through one of our authorized representatives.h. Headings. The section and paragraph headings in these Terms of Service are for convenience only and shall not affect their interpretation.Contact. You may contact us at the following address: 1156 6th Ave, 7th Floor, New York, NY 10036.