Climate Risk Management in Viticulture Through Grape Variety Diversification

This project studies the effectiveness of grape variety diversification as a risk management strategy. Using a sample of several thousand harvested quantity and quality observations from the Valais region of Switzerland over the past 20 vintages, we document that climatic conditions significantly influence quantitative and qualitative variations between vintages. The diverging and uncorrelated variations among grape varieties suggest a potential diversification effect. We report a considerable reduction in crop risk when a grape variety is added to a portfolio of existing varieties. Diversification thus allows wine producers to manage some of the climate risks they face.