Trade, storage, and climate extremes: Theory and evidence from Sub-Saharan Africa

Climate extremes increasingly threaten food security in developing countries. This paper develops a dynamic stochastic model integrating consumption smoothing, storage, and trade to examine how agricultural markets buffer climate-induced food shortages. The theoretical framework provides new insights on the role of household market transaction costs, borrowing constraints, and spatiotemporal climate patterns. Building on the theory, the paper conducts a large-scale empirical analysis of food insecurity, climate extremes, and travel times at quarterly and subnational level across 12 Sub-Saharan African countries. The empirical results show that local dry conditions exacerbate food insecurity more severely in regions with longer travel times to cities, while country-level dry conditions have stronger effects in regions farther from ports. Countries’ import capacity and stocks buffer the food insecurity impact of country-level climate extremes. Some empirical results diverge from the theoretical predictions, pointing to the need for further research on the functioning of market-based consumption smoothing.