Monday, May 14, 2012

Weather risk and the farmer

The 19th century farmer had much less control of the environment in which his crops were growing compared to modern farmers. But did weather risk get translated into different rents? After all, you'd expect a farmer who was wanting to rent land in an area where the weather was very changeable to try to negotiate a lower rent. It seems that the amount of rainfall in July matters a large amount for a grain crop such as wheat or barley. The coefficient of variation is a useful (and somewhat overlooked statistic). It is the standard deviation of a set of observations divided by their mean. So there are no units: it is just a percentage. Perfect for measuring "changeability" of weather. Malcolm kindly got me the CoV for July rainfall for 10 weather stations. I used GIS to interpolate between the stations, and then get the stretched values into the observations for our parishes. Then I ran a regression and --- wonderful news! --- CoV has a strong negative effect on rents. Greater CoV means lower rents. Below is a map of the southwest, showing the parishes and a raster of stretched CoV values. The highest CoVs are in the extreme southwest---that is Cornwall, well known for wet summers.

The pinkish bits have the lowest CoVs and it is no coincidence that wheat is grown there. The very wet areas are suitable for livestock and so that is where cattle and sheep raising went on.

No comments: