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GTAP Resource #5860

"Volatility of agricultural prices under future climate change scenarios"
by McClain, Verena and Thomas Hertel

Uncertainty around weather conditions and crop yields in any given year is an innate characteristic of agricultural production, causing prices for agricultural commodities to fluctuate. Once farmers have planted a crop in the spring, they have a limited ability to adjust production in response to adverse growing conditions or unexpected changes in demand. Commodity stockholding is a key mechanism moderating the impacts of crop yield variability on commodity prices and consumption across years. Climate change alters the probability distribution of weather conditions, with more frequent occurrences of adverse conditions such as extreme heat and droughts expected in North American growing regions. This implies that not only the probability distribution and magnitude of yield shocks, but also their year-to-year sequencing is important in determining price volatility. Using a historically validated, dynamic partial equilibrium model, we examine how the sequence of yield changes in the next few decades due to climate change affect price volatility in the corn and soybean markets in the presence of stockholding.

Resource Details (Export Citation) GTAP Keywords
Category: 2019 Conference Paper
Status: Published
By/In: Presented at the 22nd Annual Conference on Global Economic Analysis, Warsaw, Poland
Date: 2019
Created: McClain, V. (4/15/2019)
Updated: McClain, V. (4/15/2019)
Visits: 1,799
- Dynamic modeling
- Model validation and sensitivity analysis
- Climate impacts
- Agricultural policies
- Food prices and food security

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