Food & Climate Risks: Potential Consequences of Disruptions in Agricultural Productivity

Last week the British Government published a report on The Future of Food and Farming in which the role of a changing climate is appropriately highlighted as a major impediment to maintaining consistent and predictable food supplies for the world’s growing population. The timing of this report is excellent; food prices have been rising recently (see chart) and have caused significant hardship for some of the most globally vulnerable populations. These vulnerable populations live in some of the most politically unstable regions, and continued food inflation could exacerbate existing social and economic issues with potentially unpredictable consequences.

Source: UN Food and Agriculture Organization

Unfortunately as the global climate changes and agricultural productivity shifts, these sort of price rises in basic foods are likely to become more commonplace for the economically sensitive populations in these politically unstable regions – like Southeast Asia, Northern Africa, and the Middle East. This is not to imply that recent increases in food prices were caused by climate change; it is not possible to attribute a single event such as this latest spike in food prices to the long-term trends we expect to experience from our changing climate. It is, however, instructive to identify that the sort of impacts that we expect from climate change can have serious social and political implications.

Recent work shows that several of the world's most important crops could be near climactic thresholds that will seriously impair agricultural yields.Several of these crops (like corn, rice, soybeans and wheat - the source of 75% of global calorie consumption) appear to be sensitive to increases in temperature variation, especially to the occurrence of a particularly hot day in the middle of the growing season. Increases in temperature variation and the prevalence of what are historically unusually hot days is exactly what our best models of the future climate predict. Even if global yields are able to remain fairly constant due to human adaptation to the shifting regions of agricultural productivity (e.g., northward from the U.S. Plains to Canada and Siberia), the temporary economic dislocation will certainly be difficult for today's farmers and for the people who are dependent on the food that they produce.

Other research suggests that increasing temperatures could cause major difficulties for farmers in Southeast Asia who produce a large fraction of global rice output, an important staple in the region. This research recognizes that the human body simply cannot perform the hard manual labor (like that needed to tend to rice paddies) at the temperatures climate models predict. By 2050, these temperatures are expected to be commonplace for the region – potentially resulting in a huge loss of agricultural output.

While agricultural contributions to overall GDP in the rich world may seem relatively minor, it is important to remember that GDP is only a measure of economic activity and not a measure of well-being. The well-being that food provides is not necessarily proportionate to its market price. A common example used to illustrate this point is a comparison of the price of diamonds to the price of water. Water is much less expensive but is an absolute necessity. Staple foods are similar. If the price of diamonds increases, people (in aggregate) can choose to purchase less. If the price of water or food increases however, there is little flexibility (elasticity, in economic terms) in terms of how much less people can choose to buy.  

If food prices rise in the rich world, consumers will spend more of their income on food and forgo other consumption options. In developing nations this trade-off may not be possible – creating a situation where political unrest could become more likely. According to World Bank data, over 50% of the world’s population lives on less than $2 a day. Obviously for these populations, even small increases in the prices of staples can cause real difficulties since a large fraction of their income is already spent on food. Some of the regions that have the highest concentrations of the global poor are also the regions that tend to be among the most politically volatile. Though it is unlikely that food prices would directly cause conflict or instability in these regions, it is more likely that the stress caused by higher (or more volatile) food prices will worsen existing socio-economic pressures. 

The resulting consequences will be difficult to predict; and by their nature will create difficulties in creating an effective adaptive response. Though it will likely never be clear which future conflicts could have been avoided in the absence of climate change, we do know that proactive policy effort taken now can reduce the eventual impact of future food price pressures.

Russell Meyer is the Senior Fellow for Economics and Policy