Assessing the impacts of climatic and technological factors on rice production: Empirical evidence from Nepal

Considering the significant impact of climate change on major staple food crops in Nepal, this study aims to estimate the influence of climatic factors (i.e., CO2 emissions, average temperature, and average precipitation) and technological factors (i.e., fertiliser consumption and improved seeds) on rice production in Nepal from 1990 to 2016 using the autoregressive distributed lag (ARDL) approach. While controlling for cultivated rice areas, agricultural credit variables are likely other essential rice production factors. This study reveals a long-run cointegration connection among the variables. The ARDL results indicate that CO2 emissions decreased rice production by 0.13%, while average temperature and average precipitation improved rice production by 0.72% and 0.01%, respectively, in the long run. Further results show that cultivated rice area, fertiliser consumption, and agricultural credit enhanced rice production by 2.26%, 0.05%, and 0.02%, respectively, in the long run. Unidirectional causality among cultivated areas, fertilisers, seeds, temperature, CO2 emissions, and rice production was confirmed. Additionally, impulse response and variance decomposition verified the substantial impacts of climate and technological factors on rice production and variations. This study empirically confirmed that the use of agricultural technology (i.e. fertiliser consumption) significantly enhanced rice production; therefore, this study suggests that the Nepalese government should expand subsidised fertilisers so as to increase rice production and improve the income of farmers. In addition, agricultural credit plays a vital role in enhancing rice production in Nepal; to cope with climate change, the study also suggests that there is a need to launch carbon/weather financing schemes through financial intuitions in the country.