The Crucial Role of International Trade in Adaptation to Climate Change

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.

By Christophe Gouel

This piece concentrates on the effects of trade internationally on climate change. This is the idea that Gouel came up with is that large amount of imports and exports effect the domestic demand for the products. The producers of the agriculture have a decision to what to use their space for they would either use it for agricultural growth or for spaces for other labour to occur, like factory work. The main question that they have to ask themselves is which is going to return the most revenue throughout the year (regardless of the seasonal weather). Their stock diversification will be important in their maximization of profits to stay in line with the world demand of the products. 

In my opinion it is very important to regulate the use of agricultural growth and crops because it is taken that everything is available for free trade apart from the grass used as feed for the animals. And with growth of crops it would be expected that the demand and supply of the product is flexible. The demand for the crops for food in US in significantly higher than the consumption of crops that the world which isn't possible for America to sustain their own food consumption, which requires a high level of imported products from throughout the world which makes these products have a higher carbon footprint which effects the climate change in the world, which will have a great effect on what the world can produce in the future with the different weather conditions. Where the world population will continue to increase it will be very challenging on the worlds producers to meet the ever expanding levels of demand, but doing it in a way which is good for the environment, sustaining it as well as possible.