An Econometric Analysis of Climatic Effects on Total Factor Productivity Across U.S. Dairy Counties.

High-yielding dairy cows are particularly vulnerable to heat stress, a challenge that climate change exacerbates. To quantify the impact of climatic variables on productivity, we applied a random parameter stochastic production frontier model to the United States Department of Agriculture (USDA) census data from 1978 to 2022 for 179 dairy counties, allowing us to decompose total factor productivity growth (TFPG). Our analysis indicates that technological advancements were the primary driver of TFPG, amounting to 2.52% annually. While these gains are modestly constrained by heat stress, the average impact on the overall TFPG rate was only 0.008% per year. This minimal impact is consistent with the adoption of strategies such as cooling systems and improved management. Even in the most affected counties, the effect remained slight, with the largest reduction reaching 0.08%. This limited impact suggests that the sector's adoption of technologies and management strategies appears to have mitigated potential productivity losses. This study highlights that future research is needed to quantify the direct impact of specific on-farm adaptation strategies on dairy productivity to inform well-targeted policy recommendations.