The Effects of Uniform Climate Change on International Cotton Prices and Production

In this paper, we take the yield impacts of Schlenker and Roberts (2009), specifically on cotton, under a range of uniform temperature changes and apply it to a global fiber model to map changes in cotton production and prices. Although we use the 2011-2020 time period, the results should be viewed more as potential long-term market adjustments in the absence of new technology rather than a specific forecast. We find that in terms of extreme higher temperatures in the U.S. alone (+5°C) results in higher cotton prices as much as 17% against the baseline over the 2011-2020 projection period as production is cut back, on average, by 1.8%. Meanwhile, a 5°C increase in temperature in the U.S. and the rest-of-the-world (ROW) induces a price increase of as much as 135%, on average, throughout the projection period given a lower production of 20% from baseline levels that ignore temperature changes. More modest temperature changes (+1°C) result in much more modest (+6% in price and -1.3% in global production) changes in the cotton market.

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 Record created 2017-04-01, last modified 2018-01-22

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