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.
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Moderna's COVID-19 vaccine may be having a tough time in Japan right now, due to contamination fears, but some good news for the company just came out of Belgium. Researchers there have found that the Moderna jab generates more than twice as many antibodies as the other big mRNA vaccine, from Pfizer/BioNTech, does. Fortune
Americans probably won't be able to visit the EU unless they're vaccinated, thanks to EU member states voting to boot the country from their third-country "safe" list. Israel's off the list, too, as are Kosovo, Lebanon, Montenegro and the Republic of North Macedonia. Fortune's Christiaan Hetzner takes you through the implications here. Fortune
Progressive Democrats have called on President Biden to replace rather than reappoint Fed Chair Jerome Powell. "We urge President Biden to re-imagine a Federal Reserve focused on eliminating climate risk and advancing racial and economic justice," said Reps. Alexandria Ocasio-Cortez, Rashida Tlaib and Ayanna Pressley. "Under [Powell's] leadership, the Federal Reserve has taken very little action to mitigate the risk climate change poses to our financial system." Politico
AROUND THE WATER COOLER
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A new Harris Poll suggests that, if they're going to be in a hybrid office-and-home working environment, American employees are most likely to want to spend three days per week in the office. However, the poll also showed 37% of respondents would prefer to just be back in the office full-time. Fortune
The U.S. has withdrawn its final troops from Afghanistan, where the Taliban is now hailing the country's independence. As the NYT puts it: "Unlike the Soviets defeated before them, the Americans’ legacy was not a landscape littered with the destroyed hulks of armored vehicles. Instead, they left all the arms and equipment needed to supply the Taliban, the victors, for years to come, the product of two decades and $83 billion training and equipping an Afghan military and police forces that collapsed in the face of poor leadership and dwindling U.S. support." New York Times
It's a good time for the U.S. government to be borrowing to fund worthwhile initiatives, thanks to incredibly low interest rates. But, as Fortune's Shawn Tully explains here, former Treasury Secretary Larry Summers thinks the government is going about it all wrong: "The strategy would only skirt big risks if the Treasury centered its strategy on borrowing at today’s long-term rates, now at their narrowest in history, locking in affordable payments far into the future. Summers is appalled that the U.S. government is going in precisely the opposite direction, pursuing the notoriously dangerous tack of essentially funding its bonds at longer maturities with overnight debt." Fortune
This edition of CEO Daily was edited by David Meyer.
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