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Climate change impacts on commodity price stability through changing ENSO patterns

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  • Dufrénot, Gilles
  • Ginn, William
  • Pourroy, Marc

Abstract

Climate change is a global phenomenon that has a significant impact on commodity prices. This paper analyzes the impact of El Niño–Southern Oscillation (ENSO) on global commodity prices, using a Global Factor Local Projections (GFALP) model. Firstly, we demonstrate that unanticipated ENSO movements contribute to commodity price volatility asymmetrically during El Niño and La Niña periods. Secondly, climate change might disrupt ENSO patterns. We compare the current situation with potential climate change outcomes to evaluate its impact on commodity price stability. We compute an index measuring commodity price exposure to these disruptions. We demonstrate that in most cases, these shifts exacerbate commodity price volatility. Finally, we explore several avenues to explain the observed heterogeneity in the exposure of commodity prices to the evolution of ENSO that could result from climate change, and we highlight the crucial role of international commodity markets in adapting to climate change.

Suggested Citation

  • Dufrénot, Gilles & Ginn, William & Pourroy, Marc, 2026. "Climate change impacts on commodity price stability through changing ENSO patterns," World Development, Elsevier, vol. 197(C).
    • Handle: RePEc:eee:wdevel:v:197:y:2026:i:c:s0305750x25002517
    DOI: 10.1016/j.worlddev.2025.107165
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    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • G13 - Financial Economics - - General Financial Markets - - - Contingent Pricing; Futures Pricing
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General

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