Impacts of Environmental Variables on Rice Production in Malaysia

Abstract

Climate change has brought significant changes to the earth and agriculture is the main economic sector that has suffered. The current study aims to assess the impact of climatic factors—measured by precipitation, temperature, and CO2 emissions—on rice production using time series from 1961 to 2019 in Malaysia. This research follows the ARDL bounds test and dynamic ARDL simulations methods to estimate long- and short-term connections of the variables under consideration. Empirical evidence indicates that long-run cointegration exist between variables. The results suggest that the sensitivity of rice production to changes in harvested area and temperature is high, while it is low for other inputs. Due to high humidity, the effect of precipitation on rice production is not significant, while temperature can reduce rice yield in the long and short term. However, the impact of carbon emissions on rice production is insignificant. Among the other determinants of rice production, the impact of agricultural labor is negative, but more area cultivation increases rice production over the long and short term. Results also show that the magnitude of the impact of the 2% increase (decrease) in temperature on rice production is greater than the changes in rainfall and carbon emissions. The results for the frequency domain causality test show that a one-way causality exists between temperature and rice production and between carbon emissions and rice production in the short and long run. Hence, the findings of this study can help policy makers to formulate appropriate adaptation methods and mitigation policies to reduce the negative effects of climate change on Malaysian rice production.