Working Paper: NBER ID: w25221
Authors: Christophe Gouel; David Laborde
Abstract: Climate change effects on agricultural yields will be uneven over the world with a few countries, mostly in high latitudes, that may experience gains, while most will see average yield decrease. This paper aims at quantifying the role of international trade in attenuating the effects of climate change by allowing the expression of the new climate-induced pattern of comparative advantages. To do this, we develop a quantitative general equilibrium trade model where the representation of acreage and land use choices is inspired from modern Ricardian trade models but also consistent with theoretical and empirical literature on land use choices. The model is calibrated on spatially explicit information about potential yields before and after climate change coming from the agronomic literature. The results show that the climate-induced yield changes generate large price movements that incentivize adjustments in acreage and trade. The new trade pattern is very different from the current one, showing the important role of trade flows in adapting to climate change. This is confirmed by larger welfare losses from climate change when adjustments in trade flows are constrained versus when they are not.
Keywords: International trade; Climate change; Agricultural adaptation; Welfare losses
JEL Codes: D58; F18; Q17; Q54; R14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| climate change (Q54) | agricultural productivity (Q11) |
| international trade (F19) | welfare losses (D69) |
| trade adjustments (F16) | adaptive capacity of agriculture (Q15) |
| climate change (Q54) | international trade patterns (F10) |
| lack of international trade (F19) | welfare losses (D69) |
| international trade (F19) | negative impacts of climate change (Q54) |
| trade constraints (F14) | welfare losses (D69) |