Effects of Changing Weather Patterns on the Trade of Major Food Crops

The paper examines the economic effects of expected changes in temperatures and precipitation on the trade of ten major food crops. The relative effects for developing versus developed countries are emphasized. A series of econometric models using panel data and autoregressive integrated moving average models are used to estimate and forecast relationships between yields and weather data, the results of which are used as input into MAGNET, a global computerized general equilibrium modeling framework. Econometric results show that average temperatures have increased across all areas growing major food crops. Results for precipitation are ambiguous, however, there is statistical evidence of two distinct periods, a first in which, on average, precipitation fell, followed by a second in which it increased. Results for crops with statistically significant estimates show that increasing temperatures have negatively affected yields.
These results hold for both poor and rich countries, however, the degree to which yields are reduced is crop specific and sensitive to a country’s level of wealth. MAGNET results show that changes in weather are likely to have significant effects on the production, trade, and, in some cases, the consumption of major food crops.