Commodity Prices and Volatility in Response to Anticipated Climate Change

A. Tran, David Lobell, Michael Roberts, Wolfram Schlenker and Jarrod Welch
Additional contact information
A. Tran: University of Missouri
David Lobell: Stanford University
Wolfram Schlenker: Columbia University, National Bureau of Economic Research
Jarrod Welch: Charles River Associates

No 201512, Working Papers from University of Hawaii at Manoa, Department of Economics

Abstract: Some predict that climate change will decrease average crop yield and increase yield variability. While the first effect, as well as possible adaption strategies, have been studied extensively, the second is less well understood and the topic of this paper. A unique feature of commodity crops is that they can be stored between periods, thereby allowing storage to smooth production shocks across time. We pair a rational competitive storage model with a statistical analysis linking global production of the four major commodity crops (maize, wheat, rice and soybeans) and climate forecasts from 16 global climate models. The rational storage model predicts a doubling of average storage levels by 2050, slightly raising average prices to cover higher storage losses, but at the same significantly reducing price variability compared to a storage rule that is optimal under past yield distributions. Storage market responses to future yield variability greatly mitigate potential welfare losses of greater production volatility.

Date: 2015-09
New Economics Papers: this item is included in nep-agr and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.economics.hawaii.edu/research/workingpapers/WP_15-12.pdf First version, 2015 (application/pdf)

Related works:
Working Paper: Commodity Prices and Volatility in Response to Anticipated Climate Change (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hai:wpaper:201512

Ordering information: This working paper can be ordered from
http://www.economics ... esearch/working.html

Access Statistics for this paper

More papers in Working Papers from University of Hawaii at Manoa, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Web Technician ().