Food Policy in a Warming World

Allan Hsiao, Jacob Moscona and Karthik Sastry

No 32539, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Do governments systematically intervene in agricultural markets in response to climate shocks? If so, what are the aggregate and distributional consequences? We construct a global dataset of agricultural policies and extreme heat exposure by country and crop since 1980. We find that extreme heat shocks to domestic production lead to increased consumer assistance. This effect is persistent, primarily implemented via border policies, and stronger in election years when politicians are particularly responsive to constituent demands. Shocks to foreign production lead to increased producer assistance, consistent with policymakers’ targeting redistribution rather than price stabilization. Interpreted via a model, the estimates imply that policy responses almost fully stabilize prices in shocked markets, reducing losses to domestic consumers by 97% while increasing those to domestic producers and foreign consumers by 55% and 105%, respectively. Responsive policy exacerbates overall welfare losses from projected end-of-century climate shocks by 14%.

JEL-codes: Q18 Q54 Q56 (search for similar items in EconPapers)
Date: 2024-06
New Economics Papers: this item is included in nep-agr, nep-env and nep-int
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