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Assessing the Macroeconomic Impacts of Stochastic Climate Shocks in Paraguay

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  • Ruberl, Heather
  • Yoong, Pui Shen
  • Castillo, Diego
  • Boehlert, Brent

Abstract

This paper examines the macroeconomic consequences of climate shocks in Paraguay, a small and open agricultural exporter that is highly exposed to droughts and floods. Utilizing a modified version of the World Bank’s Macro-Fiscal Model, the analysis integrates stochastic climate shocks drawn from external biophysical models to assess the impacts of extreme weather events such as droughts, heatwaves and floods on agriculture and livestock production and labor productivity in Paraguay. The findings reveal significant vulnerabilities in agricultural outputs and exports across a range of climate scenarios. The paper presents a comprehensive analysis across different climate scenarios ranging from mild to severe and quantifies the range of potential impacts on key economic indicators.

Suggested Citation

  • Ruberl, Heather & Yoong, Pui Shen & Castillo, Diego & Boehlert, Brent, 2025. "Assessing the Macroeconomic Impacts of Stochastic Climate Shocks in Paraguay," Policy Research Working Paper Series 11259, The World Bank.
    • Handle: RePEc:wbk:wbrwps:11259
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    File URL: https://documents.worldbank.org/curated/en/099316011142519105/pdf/IDU-e0824948-7d81-4c7d-98c7-ae08816cb081.pdf
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    References listed on IDEAS

    as
    1. Juan Bravo & Walter Collischonn & Adriano Paz & Daniel Allasia & Federico Domecq, 2014. "Impact of projected climate change on hydrologic regime of the Upper Paraguay River basin," Climatic Change, Springer, vol. 127(1), pages 27-41, November.
    2. Julián Benitez & Roger Domecq, 2014. "Analysis of meteorological drought episodes in Paraguay," Climatic Change, Springer, vol. 127(1), pages 15-25, November.
    3. Ervin, Paul A. & Gayoso de Ervin, Lyliana, "undated". "Household vulnerability to food insecurity in the face of climate change in Paraguay," ESA Working Papers 288947, Food and Agriculture Organization of the United Nations, Agricultural Development Economics Division (ESA).
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