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The climate emergency could have an unexpected effect on rich countries

August 31, 2021, 10:34 AM UTC

Good morning. David Meyer here in Berlin, filling in for Alan.

One of the most obvious economic effects of the climate emergency relates to food production, but a new study points out something that might not be so apparent: that economically advanced countries might take a worse hit than low-income countries, even though the latter may be taking the brunt of climate change itself.

Jasmien De Winne and Gert Peersman, of Ghent University in Belgium, looked at the effects on global food commodity prices of harvest disruptions (specifically, to corn, wheat, rice and soybean harvests) and weather shocks. The results for both types of event are similar: in GDP terms, richer countries get hit the hardest.

“High- and middle-income countries are much more affected by global food commodity price shifts that are caused by harvest and/or weather shocks elsewhere,” they write. “Real GDP in these two groups of countries declines by 0.52% and 0.91%, respectively, whereas the peak decline in low-income countries is only 0.19% and statistically insignificant.”

Whence the disparity? The researchers, who themselves seem surprised by the result, note that low-income counties tend to be shielded from changes in global prices by higher levels of self-sufficient farming and trading on local markets, plus the trade benefits of being net exporters of agricultural products.

For richer countries, the stronger effects of food commodity price surges could “seriously impede” their economic recovery from the COVID-19 pandemic, De Winne and Peersman warn.

“In contrast to common perception, the macroeconomic repercussions of increases in global food prices are greater in advanced economies than in low-income countries,” they write. “This suggests that the consequences of climate change on advanced countries may be greater than previously thought. This also implies that we need a more nuanced debate on the welfare effects of higher food prices.”

Staying in the same realm, CNBC has an interesting piece about the likely effects of climate change on farming in the U.K., from the choice of crops, to the ability to maintain current livestock levels, to business models needing adaptation to account for the rising cost of water. On the other hand, the British wine industry seems to be benefiting from higher temperatures.

More news below.

David Meyer
@superglaze

david.meyer@fortune.com

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This edition of CEO Daily was edited by David Meyer.

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