The impact of weather on the trade of agricultural commodities: implications for future energy systems

27 Feb 2019

Crop production in a changing world

The international community is more and more concerned about the environmental and economic consequences of climate change. Apart from the expected implications of climatic patterns on agricultural productivity, climate change can also affect agricultural trade. This will have important implications for future food needs and ultimately energy scenarios, especially those relying on a considerable amount of bioenergy.

Our current research explores the effects of weather on bilateral trade of agricultural commodities, for 17 crops, spanning 27 years (1986-2012). The main highlight of the analysis is that weather factors (temperature and precipitation) appear to have a positive impact on exports up to a threshold after which the effect becomes negative. By quantifying losses and benefits due to weather changes, we can identify winners and losers from climatic patterns. In future research, we will assess the environmental and social impacts of global scenarios containing a sizeable share of bioenergy, by taking into account country and crop specific yield potentials, considering the evolution of the trade network, food demand and availability of land.

The pull of countries great and small

Our research is underpinned by previous work showing how agricultural exports are influenced by trade barriers and crop productivity, proxied by weather factors. To understand the influence that these factors have on international trade we employ gravity models. As the name implies, these models describe trade in much the same way that we understand the interactions between stars and planets. In gravity trade models interactions between countries are a function of the size of economies and the distance between them. By adjusting the models to account for agricultural trade, we incorporate natural disasters and crop-specific temperature and precipitation of both origin and destination countries. This enables us to examine the role of weather conditions in driving bilateral exports of 17 crops between 1986-2012. We use high-resolution crop-specific weather data based on growing locations and seasons, for crops of great importance to global food needs based on caloric intake.

Winners and losers

Our findings suggest that the impact of weather factors on bilateral crop exports is explained by a hump-shaped relationship for the majority of crops. Initially as temperature and precipitation in exporting countries increase there is a corresponding increase in productivity and exports. However, beyond crop specific thresholds, changes in weather have a negative impact on growing conditions and impact on production and exports. One of the most important findings is that the weather effects are markedly different around the globe. This means that you will get some countries that are winners, and some that are losers under a changing climate. For instance, the percentage impact of 1 C on exports varies between -19% (Pakistan) and 13% (Japan) for the case of wheat.

What’s next?

Our findings contribute to our understanding of weather effects on agricultural trade, and eventually of the implications on global food consumption, bearing in mind the potential of country-specific crop yields is crucial in mitigating climatic implications on production. By combining the impact of different climatic scenarios, future research will draw implications for energy scenarios containing a sizeable share of bioenergy and therefore contribute to the debate about the desirability of different pathways to a decarbonised energy system.

Further details can be found at the project page.