Climatology

Agents of Change: Climate Change and International Trade

Climate change is one of many potential influences on economic activities. The impact of climate change may either be enhanced or mitigated by existing conditions of an economic system such as international trade, production areas and markets, and by evolving adjustment decisions within an industry. As a result, assessing the potential impacts of climate change and their relative importance compared to other agents of change is difficult, especially for economic activities with multiple, world-wide linkages. This exploratory project, which is funded by the National Science Foundation Human and Social Dynamics Program, is using a modest-sized, yet international, industry as a prototype to develop approaches for improving the assessment of climate impacts, vulnerability and adaptation. The tart-cherry industry was chosen as the prototype industry because ninety percent of world production is concentrated in only nine countries in North America and Central Europe. Furthermore, this industry is highly sensitive to climate extremes, and, like many others, has a long planning horizon and requires long-term investments before returns are realized.

Potential contributions of this research include a better understanding of local and global vulnerabilities of an industry, the impact of emerging and declining production regions on regional economic development, international product and market differentiation as possible adaptation strategies, and the role of credit and insurance in managing risk. An important goal is to develop improved methods for assessing climate impacts, vulnerability, and adaptation. The eventual products of the research will have significance for any commodity market that is vulnerable to climate variations and change and will allow stakeholders and decision makers to better anticipate the complex consequences of change. This is a collaborative project that in addition to faculty at MSU involves scientists from Belgium, Germany, Poland, and the Ukraine.