Monday 04 March 2024 12:00 - 13:30

SAL 1.04, 1st Floor Conference Room, Sir Arthur Lewis Building, LSE, 32 Lincoln's Inn Fields, London WC2A 3PH

About this event

This paper studies the interaction between climate change and agricultural policy. Using a model of tax policy in an open agricultural economy, we show that the effect of climate shocks on policy is theoretically ambiguous and depends on how the government weighs constituent welfare against fiscal revenue. To study these relationships empirically, we construct a new global dataset of agricultural policy, trade, production, and extreme heat exposure by country and crop from 1980 to 2011. We find that extreme heat shocks to domestic production lead to consumer assistance, particularly in election years when politicians may prioritize redistribution over revenue. Extreme heat shocks to import partners lead to producer assistance, implying that foreign policy responses may partially offset, rather than amplify, domestic policy responses. Our estimates, combined with the model, suggest that endogenous trade policy explains 14% of predicted damages from end-of-century climate change, with stark distributional consequences both within and across countries. Our results underscore how climate change affects agricultural policy, which in turn shapes adaptation to global warming.

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Directions

This event will take place in SAL 1.04, 1st Floor Conference Room, Sir Arthur Lewis Building, LSE, 32 Lincoln's Inn Fields, London WC2A 3PH.

This series is part of the CEP's Labour Markets programme.