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The Crucial Role of International Trade in Adaptation to Climate Change

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  • Christophe Gouel
  • David Laborde

Abstract

Climate change effects on agricultural yields will be uneven over the world with a few countries, mostly in high latitudes, that may experience gains, while most will see average yield decrease. This paper aims at quantifying the role of international trade in attenuating the effects of climate change by allowing the expression of the new climate-induced pattern of comparative advantages. To do this, we develop a quantitative general equilibrium trade model where the representation of acreage and land use choices is inspired from modern Ricardian trade models but also consistent with theoretical and empirical literature on land use choices. The model is calibrated on spatially explicit information about potential yields before and after climate change coming from the agronomic literature. The results show that the climate-induced yield changes generate large price movements that incentivize adjustments in acreage and trade. The new trade pattern is very different from the current one, showing the important role of trade flows in adapting to climate change. This is confirmed by larger welfare losses from climate change when adjustments in trade flows are constrained versus when they are not.

Suggested Citation

  • Christophe Gouel & David Laborde, 2018. "The Crucial Role of International Trade in Adaptation to Climate Change," NBER Working Papers 25221, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:25221
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    Cited by:

    1. Dumortier, Jerome & Carriquiry, Miguel A. & Elobeid, Amani E., 2020. "Impact of Climate Change on Global Agricultural Markets under Different Shared Socioeconomic Pathways," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304390, Agricultural and Applied Economics Association.
    2. Annalisa Marini & Steve McCorriston, 2019. "Weather, Prices and Spillovers," Discussion Papers 1905, University of Exeter, Department of Economics.
    3. Zhao, Xin & van der Mensbrugghe, Dominique Y. & Keeney, Roman M. & Tyner, Wallace E., 2020. "Improving the way land use change is handled in economic models," Economic Modelling, Elsevier, vol. 84(C), pages 13-26.
    4. Zhao, Xin & Calvin, Katherine & Wise, Marshall, 2020. "The critical role of conversion cost and comparative advantage in modeling agricultural land use change," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304204, Agricultural and Applied Economics Association.
    5. Farid Farrokhi & Heitor S. Pellegrina, 2020. "Global Trade and Margins of Productivity in Agriculture," NBER Working Papers 27350, National Bureau of Economic Research, Inc.
    6. Xin Zhao & Katherine V. Calvin & Marshall A. Wise, 2020. "The Critical Role Of Conversion Cost And Comparative Advantage In Modeling Agricultural Land Use Change," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 11(01), pages 1-44, February.

    More about this item

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • F18 - International Economics - - Trade - - - Trade and Environment
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns

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