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GTAP Resource #6084

"Impacts of interannual climate and biophysical variability on global agriculture markets"
by Zhao, Xin, Katherine Calvin, Marshall Wise, Pralit Patel, Snyder Abigail, Stephanie Waldhoff, Mohamad Hejazi and James Edmonds

Agricultural production is highly sensitive to changes in climate and weather patterns. The focus of the great majority of studies assessing climate impacts on agriculture has been on mean changes in agricultural responses. However, the manner in which global agricultural markets respond to the interannual variability of the climate and biophysical shocks is poorly understood. Here we show a strong transmission of interannual variations in climate-induced biophysical yield shocks to agriculture markets, which is magnified further by endogenous market fluctuations. We demonstrate the importance of imperfect versus perfect expectations of market and weather in generating the market fluctuations that play a key role in transferring the interannual variations to markets. We find that the volatility of market prices and consumption could be potentially reduced on average by 55% and 41%, respectively, with improved expectations, where agricultural producers make better decisions to adapt to climate and biophysical variability. We also find much heterogeneity in interannual variability across crops and regions, which is considerably mediated by trade as part of the economic response. Our study provides new insights on climate impacts on agricultural market variability and lays a foundation for further investigating the full range of climate impacts on biophysical and human systems.

Resource Details (Export Citation) GTAP Keywords
Category: 2020 Conference Paper
Status: Not published
By/In: Presented during the 23rd Annual Conference on Global Economic Analysis (Virtual Conference)
Date: 2021
Version: 1
Created: Zhao, X. (4/15/2020)
Updated: Zhao, X. (6/27/2021)
Visits: 1,214
- Dynamic modeling
- Climate change policy
- Climate impacts
- Land use
- Trade and the environment
- Food prices and food security

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SI is available upon request. The paper will be updated once published.

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