Epsilon Archive for Student Projects

Abstract

Climate change poses increasing risks to agriculture, prompting interest in strategies like crop diversification to improve resilience. This study investigates whether functional crop diversity enhances farmers' economic resilience to temperature variations. Using panel data from 266 Swedish municipalities over 18 years (2001 - 2018), a panel regression analysis was used to examine the effects of temperature, precipitation, and functional crop diversity on farm income, proxied by value added per labor unit. Temperature increases were found to have a significant positive effect on farm income, while precipitation had no significant impact. Functional crop diversity had a negative and insignificant effect on farm income, and the interaction between temperature and functional diversity was also not statistically significant. While functional crop diversity does not appear to influence short-term income, it may still provide long-term ecological benefits. Policymakers may consider supporting diversification to enhance agricultural resilience under climate change.