Extreme Weather and Global Agricultural Markets: Experimental Analysis of the Impacts of Heat Waves on Wheat Markets

Thomas Chatzopoulos, Ignacio Pèrez Domínguez, Matteo Zampieri and Andrea Toreti

No 258186, 2017 International European Forum, February 13-17, 2017, Innsbruck-Igls, Austria from International European Forum on System Dynamics and Innovation in Food Networks

Abstract: Extreme-weather events frequently drive production fluctuations, price volatility, and hence uncertainty on agricultural commodity markets. Simulation models of global agriculture typically assume normal weather in deterministic scenarios, contain no explicit parameterization of weather elements on the supply side, and confound multitudinous sources of yield fluctuation in exogenous yield shocks. As a part of a wider project on extreme events modelling, in this paper we present the experimental design of a first attempt to explicitly parameterize extreme weather into a partial equilibrium model of global agriculture (Aglink-Cosimo). We outline the main model additions and present preliminary estimates of wheat yield-to-heat elasticities for key regions. We also present the potential wheat market impacts from a counterfactual heat-wave scenario in Australia. Finally, we outline ongoing and future work on multi-scenario analysis in the context of extreme weather and global markets.

Keywords: Agribusiness (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:ief017:258186

DOI: 10.22004/ag.econ.258186

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