The Crucial Role of International Trade in Adaptation to Climate Change

50 Pages Posted: 5 Nov 2018 Last revised: 1 Jun 2023

See all articles by Christophe Gouel

Christophe Gouel

Paris-Saclay Applied Economics; Centre d'Etudes Prospectives et d'Info. Internationales (CEPII)

David Laborde

United Nations - Food and Agriculture Organization (FAO)

Date Written: November 2018

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

Gouel, Christophe Benoit and Laborde, David, The Crucial Role of International Trade in Adaptation to Climate Change (November 2018). NBER Working Paper No. w25221, Available at SSRN: https://ssrn.com/abstract=3278521

Christophe Benoit Gouel (Contact Author)

Paris-Saclay Applied Economics ( email )

United States

HOME PAGE: http://https://www.christophegouel.com

Centre d'Etudes Prospectives et d'Info. Internationales (CEPII) ( email )

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Paris Cedex 15, F-75015
France

David Laborde

United Nations - Food and Agriculture Organization (FAO) ( email )

Viale delle Terme di Caracalla
Rome, Lazio 00153
Italy

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