Systemic Risk in Global Agricultural Markets and Trade Liberalization under Climate Change: Synchronized Crop-Yield Change and Agricultural Price Volatility

Climate change will increase simultaneous crop failures or too abundant harvests, creating global synchronized yield change (SYC), and may decrease stability in the portfolio of food supply sources in agricultural trade. This study evaluated the influence of SYC on the global agricultural market and...

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Bibliographic Details
Published inSustainability Vol. 12; no. 24; p. 10680
Main Authors Kunimitsu, Yoji, Sakurai, Gen, Iizumi, Toshichika
Format Journal Article
LanguageEnglish
Published Basel MDPI AG 21.12.2020
Subjects
Agricultural commodities
Agricultural policy
Agricultural production
Climate change
Corn
Crop yield
Crops
Earthquakes
Equilibrium
Fertilizers
Flood damage
Food security
Food sources
Food supply
Global climate models
Harvest
Monte Carlo simulation
Precipitation
Prices
Rain
Reproducibility
Soybeans
Statistical analysis
Supply & demand
Sustainability
Trade
Trade liberalization
Volatility
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Summary:Climate change will increase simultaneous crop failures or too abundant harvests, creating global synchronized yield change (SYC), and may decrease stability in the portfolio of food supply sources in agricultural trade. This study evaluated the influence of SYC on the global agricultural market and trade liberalization. The analysis employed a global computable general equilibrium model combined with crop models of four major grains (i.e., rice, wheat, maize, and soybeans), based on predictions of five global climate models. Simulation results show that (1) the SYC structure was statistically robust among countries and four crops, and will be enhanced by climate change, (2) such synchronicity increased the agricultural price volatility and lowered social welfare levels more than expected in the random disturbance (non-SYC) case, and (3) trade liberalization benefited both food-importing and exporting regions, but such effects were degraded by SYC. These outcomes were due to synchronicity in crop-yield change and its ranges enhanced by future climate change. Thus, SYC is a cause of systemic risk to food security and must be considered in designing agricultural trade policies and insurance systems.
ISSN:2071-1050
2071-1050
DOI:10.3390/su122410680