South Asia is the world's most poverty-dense region, where climate change and climate variability are expected to result in increased heat stress and erratic precipitation patterns that affect agricultural productivity. Considerable evidence has been generated on the effects of these stresses on crop yield, though previous research has not yet examined their influence on the economic efficiency of cereal producers. Surveying 240 farmers across eight of Pakistan's twelve agro-ecological zones, we examined the impact of temperature and precipitation anomalies – as indicators of climatic variability – and the number of days when temperature exceeds crop specific heat stress thresholds on the economic efficiency of rice and wheat production. To this end, we employed first-stage stochastic production frontier (SPF) models and second-stage ordinary least square (OLS) and quantile regression models. Both OLS and quantile regressions indicated that terminal heat >34 °C has a significant negative impact on wheat production economic efficiency. Small positive deviation (0.54 °C ± 0.16 SD) of the wheat season's mean temperature from the medium-term historical mean also significantly and negatively affected economic efficiency across all regression models. Heat stress >35.5 °C during rice flowering in the monsoon also had a significant and negative impact. A slight positive deviation in temperature averaging 0.38 °C (±0.11 SD) above the medium-term mean also had significant negative effects across all regressions. Cumulative precipitation conversely had significant yet contrary effects, by offsetting farmers’ investment in supplementary irrigation and increasing economic efficiency. Our results highlight the fact that indicators of climatic variability and heat stress negatively affect the economic efficiency of both rice and wheat producing farmers. Farmers’ education and access to financial and extension services were however both positively associated with economic efficiency. Our findings point to the importance of developing interlinked agronomic, economic and socio-ecological policy strategies to adapt and increase the resilience of Pakistan's cereal systems to climatic variability.
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