Global weather disruptions, food commodity prices, and economic activity: A global warning for advanced countries
The Intergovernmental Panel on Climate Change (IPCC) projects a significant rise in the frequency, duration, and intensity of extreme weather events such as droughts, heatwaves and heavy rainfall (IPCC 2021). The direct local economic repercussions of such events are considered to be greater in low-income countries because these countries typically already have hotter climates, which implies that ecosystems are closer to their biophysical limits, and have less access to technology that can mitigate the consequences of extreme weather. Moreover, most low-income countries have very high shares of agriculture in economic activity, which is the most vulnerable sector to weather shocks (Nordhaus 2006, Dell et al. 2012, Noy 2012, Tol 2015, Cruz and Rossi-Hansberg 2021). Since poor countries have to bear the bulk of the climate change burden, it is often argued that this acts as a disincentive for rich economies to mitigate their greenhouse gas emissions (Althor et al. 2016).
However, the rise in the frequency and intensity of severe weather events around the globe, as well as crop diseases and pests due to climate change, could also have an impact on the economic performance of countries that are not directly exposed to the extreme events through global agricultural production shortfalls and surges in food commodity prices. Specifically, since global production of the most important crops is concentrated in a small number of major producing regions that are vulnerable to extreme weather conditions, the IPCC