Climate Variability, Risk and Paddy Production

The study hypothesized that increased variability in paddy yields is related with increased risk and investigate the impact of climatic and production factors on risk. A production function was estimated with related risk properties to see how variation in climatic variables and production factors affects the probability distribution of paddy yields. Data consisted of a panel of 6 major paddy growing districts for the period, 1980 to 2010 for the two major paddy growing seasons, Yala and Maha. A three step Feasible Generalized Least Squares method is used to estimate the production function with risk properties. Results reveal that climatic factors as rainfall, maximum temperature, and production factors such as labor, machinery cost and cultivation extents are positively related with the probability distribution of yield. Hence their variability tends to increase risk. This highlights the importance of crop insurance schemes and policies that reduce food insecurity in the light of expected climate change in the years to come. DOI: http://dx.doi.org/10.4038/jepsl.v2i2.6330 Journal of Environmental Professionals Sri Lanka, Vol. 2 No. 2 2013, 57-6