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In search of factors that explain the impact of climate change on international trade

Author

Listed:
  • Alejandra Martínez – Martínez

    (Departamento de Estructura Económica, Facultad de Economía. Avda, de los Naranjos s/n. 46022, Valencia, Spain)

  • Silviano Esteve – Pérez

    (Departamento de Estructura Económica, Facultad de Economía. Avda, de los Naranjos s/n. 46022, Valencia, Spain)

  • Salvador Gil – Pareja

    (Departamento de Estructura Económica, Facultad de Economía. Avda, de los Naranjos s/n. 46022, Valencia, Spain)

  • Rafael Llorca - Vivero

    (Departamento de Estructura Económica, Facultad de Economía. Avda, de los Naranjos s/n. 46022, Valencia, Spain)

Abstract

Climate change impacts international trade. The literature suggests that thisrelationship is driven by the damage to infrastructure and reduced productivitycaused by this global phenomenon. Furthermore, recent research indicates thatthe impact on energy consumption could explain the real effects of disasters inthe United States. Using a sample of 67 countries during the period 1986–2016,we analyze whether the secular increase in global temperatures and theoccurrence of drastic climate events (wildfires, floods, extreme temperatures,epidemics, insect infestations, storms, droughts, and landslides) affectcountries’ energy consumption and labor productivity, which can subsequentlyimpact international trade. By estimating a theory-based gravity model, ourresults suggest that energy intensity is the channel through which risingtemperatures affect international trade. Furthermore, the impact of events oninternational trade does not seem to be channeled through either energyefficiency or labor productivity. A deeper analysis suggests the key role playedby China in this regard. The Chinese government’s enormous investment ininfrastructure since 1998 to manage these types of disasters seems to be themost reasonable explanation.

Suggested Citation

  • Alejandra Martínez – Martínez & Silviano Esteve – Pérez & Salvador Gil – Pareja & Rafael Llorca - Vivero, 2023. "In search of factors that explain the impact of climate change on international trade," Working Papers 2310, Department of Applied Economics II, Universidad de Valencia.
    • Handle: RePEc:eec:wpaper:2310
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    References listed on IDEAS

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    More about this item

    Keywords

    climate change; energy consumption; productivity; extreme weather events; international trade;
    All these keywords.

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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