Unraveling cross-border climate risks through climate storylines: An example from Europe's cocoa industry

Abstract

The traditional assessment of climate change's impact on agriculture, confined by geographical borders, is insufficient due to the global trade, allowing climate risks to affect multiple nations. This study uses cacao as an example to highlight cross-border climate risks, showing their implications for the EU's chocolate industry. Concentrating on cacao supply from Ivory Coast and Ghana, the study models various warming scenarios, revealing reduced cacao yields in both countries. Under RCP2.6, Ivory Coast could lose around 7% of cacao production by 2050, rising to 23% at RCP8.5. Ghana might experience losses of 39% by 2050, with a potential extreme loss of 86%. A no-deforestation import policy further affects production, reducing about 24% in the Ivory Coast and 16% in Ghana. These losses possibly cause EU supplies to decrease by 8% by 2050 in the long term and up to 20% in an extreme year. Predicted cacao price hikes of 30% by 2050 will cost the EU 2.5 billion euros annually by 2050. Extreme drought might elevate prices by 115% (RCP8.5), resulting in an additional annual expense of 10 billion euros for the EU. Findings indicate importance of addressing cross-border dimension in climate risk studies. These risks intensify with higher warming degrees, compounded by concentrated crop production, making countries dependent on these commodities highly susceptible to simultaneous, multi-location crop failures. Presently, EU trade agreements lack provisions for such scenarios. Given the increased likelihood of such shocks under a warming climate, more significant investment into disaster management strategies and policies is advisable.