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How do environmental shocks affect competitors in a supply chain? Evidence from a competitors’ weighting matrix


  • Jhorland Ayala-García
  • Federico Ceballos-Sierra


Quantifying the impact of supply shocks on global commodity trade networks is an increasing concern for researchers under the current threats of climate change and the lessons from the COVID-19 pandemic. This paper proposes a novel methodology to estimate these effects across the entire trade network: we create a weight matrix based on an index that captures the extent to which two coffee-producing countries compete within consumer markets. Using this matrix, we estimate the degree to which an adverse weather shock in a coffee-producing country influences the coffee production of its competitors. Our results show that this adverse shock has a negative direct effect on the country’s coffee exports and, importantly, a positive effect on the quantities produced by its competitors. **** Resumen: Cuantificar el impacto de los choques de oferta en las cadenas mundiales de comercio de productos básicos es una preocupación cada vez mayor para los investigadores ante las amenazas actuales del cambio climático y las lecciones de la pandemia del COVID-19. Este artículo propone una metodología novedosa para estimar estos efectos en toda la red comercial: creamos una matriz espacial de competidores basada en un índice que captura el grado en que dos países productores de café compiten dentro de los mercados de consumo. Utilizando esta matriz, estimamos el grado en que un choque climático adverso en un país productor de café influye en la producción y exportación de café de sus competidores. Nuestros resultados muestran que este choque adverso tiene un efecto directo negativo sobre las exportaciones de café del país y, más importante aún, un efecto positivo sobre las cantidades producidas por sus competidores.

Suggested Citation

  • Jhorland Ayala-García & Federico Ceballos-Sierra, 2024. "How do environmental shocks affect competitors in a supply chain? Evidence from a competitors’ weighting matrix," Documentos de trabajo sobre Economía Regional y Urbana 324, Banco de la Republica de Colombia.
  • Handle: RePEc:bdr:region:324
    DOI: 10.32468/dtseru.324

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    References listed on IDEAS

    1. Mark D. Partridge & Dan S. Rickman & M. Rose Olfert & Ying Tan, 2017. "International trade and local labor markets: Do foreign and domestic shocks affect regions differently?," Journal of Economic Geography, Oxford University Press, vol. 17(2), pages 375-409.
    2. Benjamin F. Jones & Benjamin A. Olken, 2010. "Climate Shocks and Exports," American Economic Review, American Economic Association, vol. 100(2), pages 454-459, May.
    3. Birthal, Pratap S. & Negi, Digvijay S. & Khan, Md. Tajuddin & Agarwal, Shaily, 2015. "Is Indian agriculture becoming resilient to droughts? Evidence from rice production systems," Food Policy, Elsevier, vol. 56(C), pages 1-12.
    4. Ingrid Dallmann, 2019. "Weather Variations and International Trade," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 72(1), pages 155-206, January.
    5. Ceballos-Sierra, Federico & Dall'Erba, Sandy, 2021. "The effect of climate variability on Colombian coffee productivity: A dynamic panel model approach," Agricultural Systems, Elsevier, vol. 190(C).
    6. Tiziano Distefano & Francesco Laio & Luca Ridolfi & Stefano Schiavo, 2018. "Shock transmission in the International Food Trade Network," PLOS ONE, Public Library of Science, vol. 13(8), pages 1-15, August.
    7. Janina Grabs & Stefano Ponte, 2019. "The evolution of power in the global coffee value chain and production network," Journal of Economic Geography, Oxford University Press, vol. 19(4), pages 803-828.
    8. Yusuke Kuwayama & Alexandra Thompson & Richard Bernknopf & Benjamin Zaitchik & Peter Vail, 2019. "Estimating the Impact of Drought on Agriculture Using the U.S. Drought Monitor," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 101(1), pages 193-210.
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    More about this item


    coffee; frosts; supply shocks; weighting matrix; spatial spillovers; Café; heladas; choques de oferta; matriz de pesos espaciales; difusión;
    All these keywords.

    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • F1 - International Economics - - Trade
    • Q02 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Commodity Market
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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