Abstract
Quantifying the impact of supply shocks on global commodity trade networks is an increasing concern for researchers under the current threats of climate change and the COVID-19 pandemic in increasingly interconnected supply chains. These threats are even more significant in the case of agricultural supply chains, as crops are negatively affected by extreme and erratic weather conditions and agricultural products are perishable. In this paper, we study the case of the coffee supply chain - the second most traded commodity and the most traded agricultural commodity - to empirically identify the effect of weather shocks on trade networks. We propose a novel methodology to estimate these effects across the entire trade network: we create a weight matrix based on an index that captures the extent to which two coffee-producing countries compete within consumer markets. Using this matrix, we estimate the degree to which an adverse weather shock in a coffee-producing country influences the coffee production of its competitors. Our results show that this adverse shock has a negative direct effect on the country’s coffee exports and, importantly, a positive, one-year, lagged effect on the quantities produced by competitors. These results contribute to the literature on the aggregated effects of climate change on trade.
Details
Presentation Type
Paper Presentation in a Themed Session
Theme
KEYWORDS
DROUGHTS, CLIMATE CHANGE, SUPPLY SHOCKS, WEIGHTING MATRIX, SPATIAL SPILLOVERS, AGRICULTURAL
