Weather shocks and their effects on net agrarian revenue in small and medium-size farm in Peru

This study explores the effect of weather shocks (temperature and precipitations) on net agrarian revenue in small and medium-size farms in Peru. The paper used Geographic In-formation Systems data of weather variables combined with agrarian information of more than 68,000 households from the National Agrarian Survey of the period 2015-2017. The results suggest that there is a negative effect of the temperature deviation of -6.7 percentage points over the annual net agrarian revenue per hectare. In addition, the study does not find a statistically significant effect of the precipitation deviation. Results are ro-bust to different specifications and inclusion of outliers. The estimated effects on this pa-per are similar than those estimated by Seo and Mendelsohn (2007) for small farms in Latin America. The study finds regional differences. On the Coast, the effect of temperature on net agrarian revenue is 9.9 percentage points, in the Rainforest 4.3 and no effects in the High-land. The latter is consistent with the literature that states that in cold zones the tempera-ture have either small or no effect (Seo, Mendelsohn and Munasinghe, 2005; Mendelsohn and Reinsborough, 2007). Finally, using the 4 RCP scenarios of the IPCC (2014), the paper estimates that by the end of the 21st century the losses in the annual net revenue per hec-tare for the small and medium size farms in Peru could be between 11.8 and 43.5 percent-age points.