Climate Change and Industrial Performance: Evidence from Remote Sensing Data

Abstract

This paper studies the medium-term impact of climate changes on industrial performance. We utilize the high-resolution satellite readings of soil moisture from the GLEAM database to measure climate changes globally over three decades. We examine the implications of medium-term soil moisture droughts on global food industries using the regression framework of the new climate-economy literature, and find that food industries are severely affected by medium-term soil moisture droughts. Moreover, we show this negative impact is universal across hot and cold climate regions, does not depend on a country’s income level, and is robust to time-varying heterogeneous influences from countries.