Heat, Water Control and the Limits of Fertilizer: Fixed-Effects Quantile Evidence on Cereal Yields in South Asia

Cereal production in South Asia faces rising temperatures, erratic monsoon rainfall, and diminishing returns to input intensification. This study examines how weather and farm inputs shape cereal yields across the conditional yield distribution in Bangladesh, India, Nepal, and Pakistan, which account for about 99% of the cereal area of South Asia outside Afghanistan, over 2000–2023. Following tests for cross-sectional dependence, slope heterogeneity, unit roots, and cointegration, the model is estimated by fixed-effects method-of-moments quantile regression with a moving-block bootstrap, and it is checked against mean-based panel estimators, two alternative quantile estimators, and country-by-country regressions. Results revealed that temperature is the most robust driver: a 1°C warmer year lowers cereal yields by about 4%, with almost the same loss in poor and good years. Annual precipitation has a small negative elasticity (−0.035) once temperature is controlled for, and rainfall anomalies have no systematic pooled effect, although their coefficient is negative in three of the four countries. Irrigation raises yields (elasticity about 0.14), most visibly in low-yield years, but the effect rests mainly on Bangladesh and weakens when common shocks are absorbed. Fertilizer use, arable land and lagged agricultural value added show no within-country association with yields. The evidence points to heat adaptation and better water control, rather than further fertilizer intensification, as priorities for sustaining cereal productivity in the region.

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