What role do markets and trade play in climate change adaptation?
Global trade is a complex, politically charged issue that has important implications for the global food system.
A recent paper in Food Policy, “Do Markets and Trade Help or Hurt the Global Food System Adapt to Climate Change” , investigates whether markets and trade aid or inhibit the global food system ability’s to adapt to climate change. The discussion and themes raised in the paper are based on results collected from a wide variety of sources.
The impact of climate change on agriculture , especially the impact of increased variations in rainfall and temperature and increased incidents of extreme weather events, is expected to increase significantly over the coming decades. These changes have a number of implications for the global food system. For instance, climate change is likely to result in reduced or stagnant agricultural yields, which will negatively affect overall food production. Food processing, packaging, and storage are also likely to be affected by temperature increases, potentially leading to increased costs and spoilage. The paper references various coupled climate, crop, and economic models that illustrate these negative implications (increased global rates of carbon dioxide and global temperature ) on global crop yields, crop production patterns, food prices, and effects on food processing, storage, transportation, and retailing.
There are numerous ways in which trade can help ensure food security in a changing climate. By transporting food across borders and regions, markets may be better able to facilitate the movement of food from areas of surplus to areas of deficit. Evidence also suggests that trade improves household food access by moderating price increases under climate change. Both of these factors are likely to reduce food availability challenges created by climate change. Additionally, over the past few decades, the growth in global trade has been a major driver of economic growth, employment, and poverty reduction. Evidence suggests that this growth enhances individuals’ and households’ ability to access and purchase adequate amounts of nutritious foods. It is also suggested that increased trade facilitates the spread of agricultural technology and intensification, which is likely to support countries’ capacity to adapt to climate change.
Conversely, there are also a number of ways in which trade (and increased trade liberalization) can inhibit food security in a changing climate, especially for poor and rural households. The paper discusses several of these channels, including: vulnerability to international price shocks, a lack of competitiveness in the global marketplace that leads to the inability of local governments to import sufficient food from the international market, and isolation due to poor infrastructure.
The paper highlights that increased trade and market involvement can introduce volatility into places that would not otherwise feel the effects of a distant market- or climate-related stress. For instance, FAO statistics show that during the 2008 food price crisis, food costs in Burkina Faso increased sharply despite above-average domestic agricultural production.
Lack of competitiveness and inadequate infrastructure also pose challenges. Low-income countries often do not have in place the physical, financial, and political infrastructure necessary for their farmers to compete with other producers around the world. Developing countries also often have insufficient foreign exchange reserves with which to purchase food imports. In such cases, a drought or other extreme weather event is likely to result in severe food deficits.
In conclusion, the paper argues that, based on the available evidence from the wide range of studies conducted, increased trade generally supports the global food system’s ability to adapt to climate change and improve global food security. Increased trade supports economic growth, generates income and employment opportunities, supports agricultural productivity, and allows for the movement of agricultural goods from areas of surplus to areas of deficit.
On the other hand, the results from most studies also suggest that protectionist measures and policies that limit trade (which are increasingly being discussed by policymakers) are likely to magnify the impact of climate change on food security. Limiting trade through policies like export bans is likely to inhibit or prevent the benefits of trade from reaching the food and agricultural sectors, thereby reducing the resilience of smallholders and consumers to climatic shocks. Thus, trade must be managed in ways that maximize the benefits of increased market access while simultaneously minimizing the risks, on various levels, of increased exposure to international competition and market volatility. For this to occur, especially in low-income countries, proper infrastructure and effective policies need to be developed to support all actors along the food chain.