Natural disasters and agricultural protection: A panel data analysis

Abstract

We explore the impact of natural disasters on the degree of agricultural protection using data from 76 countries thereby covering more than 70 of the most traded agricultural commodities. Theoretically, the direction of this effect is not a priori directly clear as it balances the trade-off between protecting the economic interests of the domestic agricultural sector on the one hand and ensuring food availability for the society at large on the other. Our most important findings suggest that natural disasters generally raise agricultural trade controls to favor domestic farmers. These barriers are mainly provided by limiting imports in the aftermath of a natural event. However, the protection pattern differs among countries. To be more specific, floods and storms increase agricultural protection in high-income countries, while trade barriers in many LDCs are reduced during periods of extreme drought in an attempt to diminish food scarcity. Finally, it turns out that a large part of the change in agricultural protection caused by a natural disaster is explained by a number of commodity specific particularities (i.e., food vs. cash crops).