Weather and international price shocks on food prices in the developing world

Molly E Brown,Varun Kshirsagar

doi:10.1016/j.gloenvcha.2015.08.003

Abstract

In the context of a changing climate, there is an urgent need to better understand the impact that weather disturbances have on food affordability in the developing world. While the influence of international markets on local food markets has received considerable attention, in contrast, the potential influence of weather disturbances on local food markets has received much less attention. In fact, local weather disturbances may have an adverse impact on the poorest households in developing countries. Here we quantify the short-run impact of both weather disturbances as well as international price changes on monthly food prices across 554 local commodity markets in 51 countries during the period between 2008 and 2012. We find that almost 20% of local market prices were affected by domestic weather disturbances in the short run, 9% by international price changes and 4% by both domestic weather disturbances and international price changes during the period. An improved understanding of the magnitude and relative importance of weather disturbances and international price changes on rural economies will inform public policies that are designed to mitigate the impact of adverse weather disturbances.

Highlights

In the context of a changing climate, there is an urgent need to better understand the impact that weather anomalies have on food security in the developing world
Given our hypothesis that domestic weather and changes in the international price of commodities will affect local food prices, we develop a set of models is compared against a random walk benchmark
Given that the price time series we study has only 60 observations, this formulation provides a balance between parsimony and the flexibility required to capture fairly complex local food price dynamics

Summary

Introduction

In the context of a changing climate, there is an urgent need to better understand the impact that weather anomalies have on food security in the developing world. Tropical food insecure countries are characterized by poor transport infrastructure and are among the least able to trade and offset weather risk (Brown 2014; World Bank 2014). The poor smallholder farmers in these regions are more likely to engage in subsistence agriculture (Barrett, 2008b); (World Bank 2008) and are more likely to face the risks associated with climate-related domestic weather disruptions. Despite the large literature that has examined local food prices in developing countries, there is limited systematic evidence on the relationship between domestic weather disturbances and local food prices

Methods

Results

Conclusion