Exporters’ behaviour in the face of climate volatility

Alex Bao, Philippe Bontems, Jean-Marie Cardebat and Raphaël Chiappini

No 24-1552, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: This paper investigates how exporters adjust trade margins to demand shocks and climate-induced production volatility. Combining French wine export data (113 PDOs, 49 destinations, 2001–2020) with high-resolution weather records, we estimate theory-consistent structural gravity models using instrumental variables that exploit exogenous variation in extreme temperatures. Production volatility significantly reduces export volumes, while demand shocks shape market allocation. A heterogeneity shows that exporters absorb production shocks by reallocating supply across markets, protecting volumes in core destinations while curtailing shipments to less profitable peripheral ones. A theoretical model of risk-averse heterogeneous firms rationalizes these findings through scale, redeployment, and selection effects driving export reallocation under climate risk.

Keywords: Climate Change; Cost shocks; Demand shocks; Gravity model; Heterogeneous Firms. (search for similar items in EconPapers)
JEL-codes: F12 F18 Q18 Q56 (search for similar items in EconPapers)
Date: 2024-07, Revised 2025-10
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Persistent link: https://EconPapers.repec.org/RePEc:tse:wpaper:129521

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